Crude oil futures strengthened for four consecutive trading days. According to the statistics of business agency, WTI rose from below $100 to nearly $114 in the past four trading days, up more than 14%. The market has gradually got rid of demand concerns, and the focus has gradually returned to the expectation of supply tightening.
Last Monday, the oil price once fell by more than 6%, continued to fall on Tuesday, and WTI crude oil fell below $100. On the one hand, at the macro level, the US dollar continued to strengthen, the valuation of bulk commodities denominated in US dollars was reshaped, and the oil price was under pressure; In addition, the continuous sharp decline in the stock market has affected the market mentality. On the other hand, the negative demand side dominated the market, and the epidemic prevention restrictions in Asia exacerbated the market’s concern about the demand prospect; In addition, the oil giant Saudi Arabia lowered the official price of crude oil in Asia and Europe in June, putting short-term pressure on oil prices.
After Wednesday, oil prices rebounded sharply for four consecutive trading days, fully recovering their previous losses. Oil prices rose again to $110 last Friday. According to the monitoring of business news agency, on May 16, the settlement price of the main contract of WTI crude oil futures in the United States was reported as US $114.20/barrel, an increase of US $3.71 or 3.4%; The settlement price of the main contract of Brent crude oil futures was US $114.24/barrel, up US $2.69 or 2.4%. US gasoline prices soared to an all-time high, while North American demand remained strong; Superimposed on the improvement of the epidemic situation in Asia, demand expectations and concerns eased. More importantly, the market remained cautious about the EU’s oil embargo against Russia, the expectation of supply tightening continued to ferment, and the oil price continued to rise.
Supply and demand analysis: the marginal of global energy supply and demand has weakened, and low inventory support remains
CITIC futures analysis mainly has the following views on the current crude oil market: the geographical situation is in trouble, and there is no actual impact on Russia’s energy export
| Benzalkonium chloride |
EU sanctions are temporarily limited to coal and have only been implemented since August, but there is no consensus on oil and gas, and many countries have compromised to pay rubles to buy natural gas, and the impact of geopolitical sentiment has slowed down; As of April, Russian oil exports rose instead of falling, up 3.25% from before the conflict in February.
Increased differentiation between energy sources:
Crude oil and refined oil are facing regional differentiation and variety differentiation: the United States and Europe are divided, the U.S. economy is expanding without stagnation, the superimposed energy export is strong, and the performance of U.S. oil products is the strongest; Europe has increased energy imports, the economy has fallen into stagflation, and European oil products have weakened marginally; China’s economy is sluggish but not inflated. Under the background of marginal improvement of the epidemic situation, domestic oil products are nearly weak and far stronger; With the differentiation of gasoline and diesel, the weakening of economy and the rise of temperature, the margin of diesel fell, but gasoline is still strong under the improvement of epidemic situation and the expectation of peak travel season.
Outlook: according to the analysis of CITIC futures, the global fossil energy inventory is still at a low level, and there is limited room for prices to fall sharply under low supply elasticity:
1) At present, the global fossil energy inventory is at a low level, mainly due to the low capital expenditure of fossil energy under the long-term energy transformation, the impact of the mid-term epidemic on the recovery of the supply chain, and the short-term geographical conflict.
2) The reduction of global energy dependence on Russia is difficult to achieve overnight, and Russia’s supply shortage is difficult to make up, which will exacerbate the shortage of energy supply.
3) As the impact of geopolitical conflict changes from short-term to medium and long-term, the importance of energy security increases, and the energy transformation may accelerate. It is expected that the global fossil energy supply elasticity will remain low, the space for the sharp decline of energy prices is limited, and the volatility is intensified.
Business news agency believes that the tightening of medium and long-term supply is expected to continue to support high oil prices
First, the organization of Petroleum Exporting Countries and its allies (OPEC +) have been negative about increasing production. The latest OPEC + ministerial meeting was held on May 6 to maintain the linear production increase plan in June without additional production increase commitments. On the one hand, out of financial dependence on high oil prices; On the other hand, its members also have their own difficulties in increasing production. According to the latest OPEC + monthly report, the implementation rate of OPEC + internal production control continued to differentiate. The average implementation rate of Saudi Arabia, Iraq, the United Arab Emirates and Kuwait remained at about 100% in April 2022, basically maintaining full production. However, other oil producing countries have been unable to meet the production capacity due to domestic turmoil, investment costs and other factors. In the medium term, it is expected that the additional capacity released by OPEC + through production increase will still be very limited, which will continue to help maintain oil prices at a high level.
| Sodium Molybdate |
In addition, the future uncertainty of Russian crude oil supply is still the biggest risk point in the market. The market focus is generally focused on the EU oil embargo against Russia. So far, the EU’s oil sanctions against Russia have not been finally implemented, mainly because a small number of countries such as Hungary do not support the embargo. Some EU countries also tend to postpone the ban on Russian oil. However, there are still voices in the market: the EU plans to approve a new package of sanctions against Russia and has no intention of delaying the implementation of the oil embargo. It is expected that before the implementation of the policy, the risk appetite of the market will be affected by the expectation of supply tightening.
Demand remains uncertain during the Fed’s interest rate hike
The US inflation level has remained high continuously, which poses challenges to the rhythm and intensity of the Fed’s interest rate hike. On May 11 local time, the U.S. Department of labor released a report showing that the U.S. consumer price index (CPI) in April increased by 8.3% year-on-year, higher than the previously expected 8.1%. At a recent meeting, US Federal Reserve Chairman Powell said that allowing high inflation means a more severe economic recession, and reiterated that it is reasonable to raise interest rates by 50 basis points at the next two meetings; If the situation gets worse, be prepared to take more measures. From Powell’s hawkish speech, in the short term, the capital market still performs poorly due to the expected interest rate increase, especially in the fields of stock market, crude oil and so on. In the long run, interest rate hikes may depress demand. Judging from the last round of interest rate increase process of the Federal Reserve, the Federal Reserve raised interest rates four times in 2018, and the oil price fell from about $85 / barrel to $55 / barrel. Especially at present, the epidemic still plays a role, and future demand may become the biggest constraint on oil prices. Of course, under the background of the Russian Ukrainian war, Russia’s oil supply is affected by intensive Western sanctions. The current situation is more complex. The impact of oil prices from the supply side will play a role in the long term to further offset the negative impact of the demand side.
Generally speaking, the crude oil analysts of business agency believe that the short-term oil price will still run at a high level under the influence of the implementation of the EU oil ban on Russia. In the medium and long term, oil prices will seek to rebalance supply and demand under the background of the Fed’s interest rate hike.
| http://www.lubonchem.com/ |