Due to market concerns that the new super coronavirus variant will drag down the global economic recovery and affect demand, international oil prices plummeted by more than 10%. New York crude oil fell below US$70 per barrel for the first time since the end of September, a drop of 13.04%, returning to the level of 3 months ago overnight. ; Brent crude oil is approaching 70 yuan/barrel, a decrease of 11.27%; the main contract of Shanghai crude oil futures fell to the limit yesterday night, a decrease of 8.01%, to 464.1 yuan/barrel.
Global stock markets could not escape the “catastrophe” and fell across the board. The European 50 Index once fell close to 4%, and the Dow Jones futures fell nearly 800 points. As of the close early this morning, the three major U.S. indexes have collectively fallen. The Dow Jones Industrial Average fell 2.53%, and has fallen 1.97% this week. The S&P 500 Index has fallen 2.27%, the largest decline since February, and has fallen 2.2% this week. The Nasdaq Composite Index has fallen 2.23%. %, down 3.52% this week.
The VIX panic index, a key indicator reflecting global risk appetite, has been soaring. As of early morning today, the increase expanded to 54%.
Market participants believe that the emergence of new variants of the virus has rapidly cooled short-term market sentiment, suppressed global economic growth expectations and crude oil demand, and accelerated the weakness of crude oil market fundamentals. However, there are signs that fundamental expectations for crude oil supply and demand have begun to weaken.
“The key indicator of the crude oil market – the price difference between near and far months continued to decline sharply after the release of crude oil reserves in the United States on Tuesday, reflecting the relatively weakening market expectations for future crude oil supply and demand fundamentals, and the divergence between oil prices and the spread between near and far months. In this case There is limited room for oil prices to continue to rise. At the same time, the International Energy Agency (IEA) predicts in its latest crude oil outlook that the global crude oil market will begin to experience oversupply in the first quarter of next year, and the market is currently trading futures contracts for January next year and subsequent years.” Nanhua Futures Energy Chemical analyst Liu Shunchang told a reporter from Futures Daily that as the fundamentals of the crude oil market weaken, the emergence of new variants of the virus has accelerated the decline of crude oil.
According to Zhong Meiyan, director of energy and chemicals at Everbright Futures, the industry factor that the market is paying attention to recently is the joint release of strategic oil reserves by consumer countries and OPEC+’s response to this.
“The United States, India, and Japan will release 59.2 million barrels of oil reserves. The U.S. Department of Energy recently announced that 32 million barrels of crude oil released from the Strategic Petroleum Reserve SPR will be delivered from January to April 2022. In addition, up to 18 million barrels The release notification of barrels of Strategic Petroleum Reserve SPR will be announced no earlier than December 17, 2021. Oil companies that accept crude oil must return it later, plus interest.” Zhong Meiyan said that India will release 5 million barrels from the reserve crude. The Japanese government plans to release about 4.2 million barrels of oil from reserves, equivalent to 1-2 days of the country’s needs. OPEC believes that if consuming countries release oil reserves, excess production may reach 2.3 million barrels per day and 3.7 million barrels per day in January and February next year. As a result, OPEC+ may reduce crude oil supply at its January meeting, making next week’s OPEC meeting the focus of market attention.
“The game from oil-producing countries to consuming countries will be affected by the epidemic, which will lead to market divergence and reduced risk appetite when oil prices are at high levels. The reduction and departure of macro funds has also reduced the liquidity of the crude oil market, and the oil price Volatility will also increase.” Zhong Meiyan said.
According to Liu Shunchang, the main logic of current crude oil market transactions is that the global crude oil balance sheet will shift from short supply in the fourth quarter to oversupply next year. In this process, oil prices will gradually peak and fall. The emergence of new variants has quickly shifted the market’s focus to the demand for crude oil amid global economic growth.
The reporter learned that the domestic and foreign markets are highly interconnected. Affected by the sharp drop in the external market, domestic SC crude oil jumped sharply and opened lower in the night session. Founder mid-term futures analyst Sui Xiaoying believes that in the short term, against the backdrop of a sharp rise in market risk aversion, it is not ruled out that oil prices will fall further. “In the short term, oil price fluctuations will be mainly affected by the news. The market outlook will focus on the latest developments of new variants, next week’s OPEC+ meeting and negotiations on the Iranian nuclear issue, which will all have an impact on the future supply side of crude oil.”
It is worth mentioning that early this morning, Goldman Sachs analysts Damien Courvalin and others wrote in a report: “Based on our pricing model, we believe that the Brent price of US$74/barrel is the market pricing for approximately three months. A negative demand shock of 4 million barrels per day without a corresponding offsetting response from OPEC+.” The change in the forward curve is pricing in a negative demand shock of 2.5 million barrels per day in the next three months, and already about 1.5 million barrels per day in the longer term. daily demand impact. Goldman Sachs believes that the market appears to be overpriced for oil prices.
OPEC+ is increasingly leaning towards abandoning plans to increase production next week as new virus variants trigger the worst oil price slump in more than a year. Sources said OPEC+ was leaning towards abandoning its original plan to increase production slightly in January at its meeting on December 1-2. The group was already considering suspending the program after the United States and other consuming countries announced on Monday the release of emergency oil reserves. Former White House official Bob McNally said the emergence of new variants of the virus could lead to new lockdowns and travel restrictions, and changes in market conditions could lead ministers to decide to deviate from their plans to increase production.
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