Under the intensive negative “bombing”, oil prices experienced the strongest correction this year from the end of November to the beginning of December. Last week, against the background of easing concerns about the new coronavirus mutant strain Omicron, oil prices began a recovery trend, rebounding from lows by more than $10/barrel, and Brent crude oil returned to around $75/barrel. Last week, oil prices rebounded by more than 10%, the largest weekly increase in three months. However, oil prices began to rebound to a high point on Thursday. At this point, the rebound in oil prices has basically ended, and the market needs to re-choose its direction. Current information shows that the symptoms of the Omicron strain are relatively mild, but the global epidemic situation is still serious. The number of new confirmed cases worldwide is still rising, and the epidemic situation in many European countries and the United States continues to worsen. The British health department has warned that Omicron may replace Delta as the most dominant circulating strain in the country within a few weeks, and the number of people infected with the virus is expected to exceed 1 million by the end of this month. British Prime Minister Johnson resumed the implementation of epidemic prevention guidelines for teleworking from home on December 13. This could make Britain’s economic prospects even more bleak. The development of the epidemic situation has still revived market concerns, and oil prices are still under pressure.
Data released on Friday night showed that the U.S. CPI increased by 6.8% year-on-year in November, in line with expectations, the fastest growth rate since 1982, and increasing the risk of the Federal Reserve raising interest rates. However, U.S. President Joe Biden said that inflation has not fallen fast enough so far, but it will in the future. Price increases are due to supply chain problems, and oil prices will fall in the coming months. Despite the rebound in oil prices, the net long position in oil product speculation in the Brent and WTI markets continues to decline. Obviously, investors are still quite cautious about the outlook for oil prices.
Oil prices have rebounded significantly and market sentiment has stabilized significantly, but investors are still hesitant. After the OPEC+ meeting decided to continue to increase production and the strategic crude oil sales actions of the United States and other countries are gradually implemented, the supply pressure on the crude oil market in the future will still test the market’s confidence in undertaking. Judging from current market information, the outlook for the Asian crude oil physical delivery market is weakening, and the monthly spread structure of the crude oil market is also weak. Considering the current development trend of supply and demand in the crude oil market and seasonal considerations, the performance of oil prices in the future is still not optimistic.
The market’s response to the increase in supply will become the next focus
OPEC+ decided to continue to maintain the 400,000 barrels/day production increase plan in January next year. The crude oil market will become a certain trend in accumulating storage. The first batch of bidding for the release of 32 million barrels of strategic oil reserves in the United States has ended. When the U.S. Department of Energy first announced the release of a total of 50 million barrels of strategic petroleum reserves last month, it said bids for the first batch of releases would close at 10 a.m. Central Time on Monday. Although the winning bid will not be announced until December 14, at least two international refiners have expressed interest, according to people familiar with the matter. Most of the bidders are expected to be U.S. refiners and international oil companies. According to the latest news from the U.S. Department of Energy, it has approved the release of the first batch of 4.8 million barrels of oil to Exxon Mobil. According to the announcement, deliveries will be made from storage locations in Bryan Mound, West Hackberry and Bayou Choctaw.
EIA’s latest weekly report data shows that U.S. crude oil inventories decreased by 241,000 barrels in the week ended December 3, compared with an expected decrease of 1.521 million barrels, and the previous value decreased by 909,000 barrels; crude oil inventories in Cushing, Oklahoma recorded a decrease of 241,000 barrels. An increase of 2.373 million barrels, the largest inventory increase since the week of February 19; gasoline inventories increased by 3.882 million barrels, an increase of 2 million barrels is expected, and the previous value increased by 4.029 million barrels; refined oil inventories increased by 2.733 million barrels, an increase of 1 million barrels is expected , the previous value increased by 2.16 million barrels; exports decreased by 434,000 barrels/day to 2.27 million barrels/day; imports were 6.499 million barrels/day, a decrease of 105,000 barrels/day from the previous week.
U.S. domestic crude oil production increased by 100,000 barrels per day last week to 11.7 million barrels per day. The four-week average supply of U.S. crude oil products was 20.86 million barrels per day, an increase of 10.2% from the same period last year. According to data from Baker Hughes Oil Services Company, the total number of rigs drilled in the United States increased by seven to 576 in the week ended December 10. The number of U.S. oil and natural gas drilling rigs increased in six of seven weeks. EIA’s short-term energy outlook report has revised up U.S. domestic crude oil production, predicting U.S. crude oil production in 2021 to be 11.18 million barrels per day, previously expected to be 11.13 million barrels per day. The rate was 1.58 million barrels per day, compared with 1.49 million barrels per day previously.
The impact of the Omicron mutant strain will be further reflected in oil prices
OmicThe moment the mutant strain of Rong appeared, the market was shocked. The large number of sudden mutations far exceeded market expectations. This caused panic in the market and also pushed the oil price out of an extremely rare single-day plummet of US$10/barrel. Fortunately, it subsequently More and more information shows that although the Omicron mutant strain has alarming transmissibility, the seriousness and fatality rate are not serious. Market concerns have obviously eased, so the stock market and crude oil have rebounded in the past week. However, some experts reminded that some of the initially reported Omicron cases were mostly in people who had been vaccinated, so mild symptoms do not mean that the Omicron mutant strain is less destructive. Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases, said that multiple laboratories will provide more data on the Omicron variant next week.
Judging from the epidemic situation, there is a high probability that the super transmissibility of the Omicron mutant strain will further worsen the situation. The British Health and Safety Authority said that two experiments in the UK showed that the ability of the Omicron variant to reduce neutralizing antibodies in the experiment was 20 to 40 times that of the original virus and 10 to 20 times that of the Delta strain. On December 10, local time, the latest data released by the British Health and Safety Administration showed that in the past 24 hours, there were 448 new cases of Omicron strain infection in the UK, bringing the total number of infections to 1,265. British health officials said that in the middle of this month, new cases of the Omicron variant will account for half of the total new cases, and it is expected that the number of cases of Omicron variant infection in the UK will reach 1 million by the end of December. Due to the strong escape ability of the Omicron mutant strain, more and more data show that the effectiveness of both AstraZeneca and Pfizer vaccines is reduced in dealing with mild symptoms caused by the Omicron mutant strain. However, booster shots It is effective, so many countries are also pushing to speed up the third dose vaccination program.
U.S. President Joe Biden said that although the United States saw the fastest inflation in nearly 40 years in November, price increases are slowing, especially for gasoline and cars. After the U.S. Labor Department reported that CPI rose 6.8% year-on-year in November, Biden said in a statement: “The data reflect the pressures on prices across the world’s economies as we emerge from the global COVID-19 pandemic. is rising. But developments in the weeks since these data were collected last month suggest that price and cost rises are slowing, although not as quickly as we had hoped. Half of the price increases in this report came from auto and energy costs in November “Since then, prices in both areas have begun to decline.”
Since December, the volatility of oil prices has increased significantly, and market sentiment is in an unstable stage. We have seen that as the supply and demand gap narrows, the collision between investors’ inertial thinking and the new situation has led to this phenomenon, followed by supply pressure. Continuing hawkish measures with the Federal Reserve may gradually make the market more unified, and we also need to guard against whether market concerns will return again after the spread of the Omicron mutant strain increases. Overall, the performance of oil prices in the coming period is not optimistic, and there is a high probability that the seasonal weakness will continue.
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