Over the past week, oil prices have experienced their steepest decline since April, with oil prices falling by more than $20 per barrel from their previous highs. From a fundamental point of view, the strengthening of the 10-year U.S. bond interest rate has created the release of systemic risks in the near future, driving a general decline in major asset classes.
Huang Liunan, a researcher at Guotai Junan Futures, believes that after short-term commodities experience a general decline, there may be a restorative rebound in the coming week. “Judging from the trend of the spot market, although oil prices have experienced significant adjustments in the past week, the current shortage of crude oil in Europe is still serious. The premium price of a basket of crude oils such as Forties, which represents Brent’s deliverable oil, still remains at the level when the Russia-Ukraine conflict broke out in March. “The high level.” He said that even after Brent and WTI experienced such a substantial adjustment, the price structure remained at a strong Back, and the relatively weak SC did not turn to a flat level.
In addition, the Brent-WTI price gap has widened rapidly recently, and U.S. crude oil exports to Europe may expand again in the coming weeks. There are various signs that the shortage in the spot market has not been reversed due to the decline in oil prices. This round of decline in oil prices is more dominated by macro factors. This means that once such negative emotional factors are exhausted, oil prices will most likely return to fundamentals and rebound. Considering that Biden is about to visit the Middle East, it is recommended to pay attention to the OPEC meeting held on June 29-30.
Some analysts believe: “The recent plunge in oil prices is dramatic and has been exaggerated.” Analysts said that due to the ongoing conflict between Russia and Ukraine, global crude oil supply is still quite short. As the epidemic blockade is lifted, market demand has surged and the supply and demand relationship has become increasingly tight. Therefore, crude oil prices are likely to rebound.
OPEC+’s two-year production reduction cooperation is about to expire, and future changes on the supply side are attracting attention. At the June meeting, OPEC+ ministers agreed to increase crude oil production by 648,000 barrels per day in July and August. The increase in production triggered speculation from all parties in the market. Sources previously said that U.S. President Biden may persuade Saudi Arabia to increase production when he plans to visit Saudi Arabia to help ease rising crude oil prices and inflationary pressures. Recently, there are rumors in the market that OPEC is considering ending production cuts. Some OPEC representatives said that member countries are considering the next production policy after the current round of production cuts ends in August, and may cancel the production quota restrictions since 2016 and switch to free production increases.
In the short term, Huatai Futures believes that although the U.S. government strengthened its policies to combat inflation last week, including suspending gasoline taxes, canceling the Jones Act, restricting U.S. refined oil exports, lobbying OPEC+ to increase production, etc., there are still doubts about whether it can be implemented in the future, superimposing U.S. travel The demand peak is approaching, and crude oil and its cost-related chains will most likely maintain high levels of oscillation.
“As the overseas tightening cycle accelerates, there should not be too many doubts about the risk of commodity trends peaking and falling.” Huang Liunan said that in the first half of the year, chemical industry profits continued to be low, the trend of colored series has been declining since April, and since June After the black series started to fall sharply, crude oil was under greater downward pressure from plate rotation. In addition, considering that the path for Russian crude oil to flow to the Asia-Pacific has been completely opened, the market may be restrained by the marginal negative effects of Russian oil going south for a long time in the future after pricing in the benefits of the EU halting 90% of Russian crude oil imports before the end of the year. In particular, it may dilute the downward trend in the Asia-Pacific region. The half-year seasonal peak season is good. Therefore, in the long run, if oil prices can stabilize and rebound from late June to early July, there may still be a stronger adjustment in the third quarter, with a potential downside of 20% to 30% compared to the high in the first half of the year. It may touch below 100 US dollars/barrel, SC may touch below 600 yuan/barrel.
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