On Thursday, the main SC crude oil contract closed up 1.69%. On the previous trading day, the global crude oil market saw general gains. ICE Brent and CME WTI crude oil futures closed at US$89.75/barrel and US$87.18/barrel respectively, up 1.90% and 2.32% from the previous day’s closing. Brent crude oil futures broke through during the session. US$90/barrel, reaching a high of more than 7 years.
Some market participants said the current round of oil price increases was mainly due to worsening political tensions between Russia and Ukraine, which heightened concerns that the already tight market may be further disrupted. Energy market prices rose on concerns that tensions could lead to potential disruptions in Russian oil and gas supplies to Europe. U.S. Henry Hub natural gas futures and European TTF natural gas futures rose 4.78% and 3.70% respectively within the 26th day. Although the U.S. Energy Information Administration (EIA) announced that U.S. crude oil inventories increased by 2.377 million barrels to 416.19 million barrels in the week ending January 21, this did not have a significant inhibitory effect on oil prices.
As of January 26 this year, ICE Brent and CME WTI crude oil futures have increased by 15.15% and 15.51% respectively. The main contract of Shanghai crude oil futures has increased by 8.04%, which is smaller than the increase in overseas markets.
As for the reasons for the recent continued rise in global oil prices, the market participant pointed out that first, supply growth is weak and consumption expectations are increasing. OPEC’s latest monthly report shows that OPEC crude oil production in December 2021 was 27.882 million barrels per day, and the new crude oil production was only 166,000 barrels per day, lower than the target level of 250,000 barrels per day. Among them, Nigeria’s crude oil production increased again in December. decline. At the same time, OPEC continues to maintain its consumption growth forecast of 4.2 million barrels per day in 2022. The January monthly report of the International Energy Agency (IEA) raised the global crude oil demand growth in 2022 to 3.3 million barrels per day, reaching 99.7 million barrels per day, which is even about 200,000 higher than the demand in 2019 before the epidemic. barrel/day. Strong demand and tepid supply growth pushed oil prices higher.
Second, crude oil inventories continue to remain low. EIA data shows that as of the week of January 21, U.S. crude oil inventories were 416 million barrels, and Cushing area inventories were 31.701 million barrels, a decrease of 1.661 million barrels and 5.605 million barrels respectively from the end of 2021. They have continued to remain below the five-year average. More than half a year. Crude oil inventories continue to remain low, providing effective support for oil prices.
Third, geopolitical and emergencies occur frequently. In January, multiple geopolitical and emergencies occurred in the Middle East, Eastern Europe, West Asia and other places, continuously pushing up oil prices. At the beginning of the month, Kazakhstan caused unrest due to the increase in domestic liquefied petroleum gas (LPG) prices, which led to the reorganization of the domestic government and the dispatch of troops from the CSTO. On the 17th, Yemen’s Houthi rebels claimed to have attacked an important oil facility in Abu Dhabi, resulting in the death of many people and the explosion of three oil tankers. On the 24th, the Houthi armed forces once again announced that they had launched a military operation code-named “Yemen Hurricane 2” and successfully attacked the hinterlands of the United Arab Emirates and Saudi Arabia. Recently, tensions between Russia and Ukraine have been tense. US Secretary of State Blinken said that if Russia takes action, the United States will ensure that global energy supplies will not be disrupted. Russia is one of the world’s largest oil producers and an important supplier of crude oil and natural gas. If a full-scale conflict breaks out between the two countries, the West could impose oil-related sanctions on Russia, further tightening world crude supplies. In addition, Iran’s negotiations are progressing slowly, and incidents such as the sudden explosion of the Iraq-Turkey crude oil pipeline have also continued to increase oil prices.
“At the same time, U.S. monetary policy still needs attention.” The above-mentioned market participants reminded that the Federal Reserve’s December interest rate meeting decided to accelerate Taper in January 2021 and reduce the monthly bond purchase scale to US$40 billion in Treasury bonds and US$20 billion in MBS. , and it is expected to raise interest rates three times in 2022. The meeting on the 26th kept short-term interest rates unchanged and signaled the intention to raise interest rates in mid-March. Chairman Powell said there is currently “considerable room” to raise interest rates. The tightening of U.S. monetary policy and the appreciation of the U.S. dollar will likely suppress the prices of risky assets including crude oil, and the U.S. stock market has already fallen.
Taken together, the above factors will likely dominate the global oil price trend during the Spring Festival. In particular, we need to pay attention to geopolitical changes such as the situation in Ukraine and Russia, negotiations with Iran, and the Houthi armed actions in Yemen. In addition, non-agricultural and other U.S. economic data will also be released during the Spring Festival, which is also expected to have an impact on crude oil market prices.
According to the “Notice on Relevant Work Arrangements during the Spring Festival of 2022” issued by the last issue of Energy on the 25th, the Shanghai crude oil futures margin ratio and price limit range will be adjusted to 12% and 10% from the closing settlement on the 27th (both increased by 2% from the current point), after the post-holiday (February 7) trading, it was adjusted back to the original level.
Analysts said that given that the domestic market is closed during the Spring Festival, external oil prices are subject to greater fluctuations, and investors are advised to participate in light positions and pay attention to risk control.
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