Affected by the market’s optimism about the outlook for oil demand, crude oil futures have continued to rebound in recent days. As of yesterday’s close, the main domestic crude oil futures contract closed at 524.1 yuan/barrel, up 1.83%.
“According to the latest data from the EIA, in the week ended January 7, U.S. crude oil inventories decreased by 4.553 million barrels, Cushing crude oil inventories decreased by 2.468 million barrels, gasoline inventories increased by 7.961 million barrels, and refined oil inventories increased by 2.537 million barrels. Gasoline inventories increased A substantial increase indicates that terminal demand is weak, but crude oil inventories continue to decline and have now reached the lowest point since the week of October 5, 2018, thus driving oil prices to rise sharply. And in the recently released January short-term energy outlook, EIA , slightly lowering the growth rate of U.S. crude oil production in 2022, and slightly raising the growth rate of global crude oil demand, which also gave bulls confidence.” Zheng Mengqi, an energy researcher at Hizheng Futures, said that in addition, the ambiguous attitude of Federal Reserve Chairman Powell has led to an increase in risk asset preferences , the market is currently pricing the Fed to raise interest rates four times. If the number of interest rate hikes is lower than expected, or the balance sheet reduction process is lower than expected, oil prices are expected to continue to rise.
While the bullish sentiment in the market is currently high, Zheng Mengqi believes that the negative factors in the crude oil market cannot be ignored. Omicron continues to spread, and the number of new confirmed cases worldwide continues to hit new highs every day. Traffic data in most major Asian cities so far is lower than last month, Apple’s travel data shows. FlightRadar24 data shows that in the seven days ending January 9, the number of global commercial flights fell by 17% and 21% respectively compared with the same period in 2019 and 2020. Taken together, global crude oil demand is weak.
“Therefore, we predict that in the short term, the crude oil market will be intertwined with bulls and bears, and crude oil prices will oscillate at high levels. In the medium term, due to the unstable situation in Libya and Kazakhstan, the pace of global crude oil supply and demand has been delayed. As Libyan crude oil production gradually recovers, Kazakhstan The impact on crude oil supply is relatively small. U.S. crude oil production increased slightly, OPEC+ maintained production increases, and after the epidemic peaked and fell back, retaliatory travel consumption may occur. Crude oil supply and demand will transition from a tight balance to a loose balance by the end of the first quarter. In addition, We need to pay attention to whether the Fed’s interest rate hike and balance sheet reduction are in line with market expectations,” Zheng Mengqi said.
As of yesterday afternoon’s closing, the main LPG futures contract among the energy and chemical products fell sharply by 3.5% to close at 4,776 yuan, a relatively large correction. Judging from the performance of the spot market, as of January 13, South China civil gas was 5,550 yuan/ton, Shandong civil gas was 5,550 yuan/ton, and Shandong ether carbon four was 5,615 yuan/ton, all of which have declined slightly since January 7.
From the demand side, Zheng Mengqi told reporters that currently, the peak demand season for liquefied gas combustion is gradually ending, the market buying and selling sentiment is average, and the spot price of civil gas in South China is weakening. In the half month before the Spring Festival, refineries are under pressure to discharge storage, the operating rate of downstream deep processing units is expected to decline, and the price of post-ether C4 is falling. In addition, the profits of PDH units remain low. As the Spring Festival approaches, olefin deep processing manufacturers may suspend operations. Downstream demand for liquefied gas gradually weakened.
“From the supply side, domestic refinery operating rates remain relatively high, OPEC+ maintains production increases, U.S. propane exports remain relatively high, and liquefied gas supply is relatively sufficient. As of the week of January 13, the liquefied gas inventory rate at East China Terminals was 48.69 %, the liquefied gas inventory rate of South China Terminal is 55.27%, and the South China port is slightly overstocked. On January 12 and 13, liquefied gas warehouse receipts increased by 495 and 250 lots respectively, with a total warehouse receipt volume of 9333 lots, and the pressure on warehouse receipts is high .” Zheng Mengqi believes that overall, the LPG supply side is relatively stable, the peak combustion demand season is gradually ending, and the demand for deep processing is also weakening due to various factors. Considering that liquefied gas warehouse receipts will be canceled intensively at the end of March, and the warehouse receipt pressure is relatively high. Large, the liquefied gas oscillation is mainly weak.
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