Review of international crude oil market trends
Crude oil futures market review this week
This week (11.18-11.24), international crude oil futures prices showed a trend of first declining and then rising, with the average price of U.S. and Burundi oil falling from last week. At the beginning of this week, U.S. President Biden sought ways to lower gasoline prices for American consumers. In addition to repeatedly mentioning the release of U.S. strategic oil reserves, he also called on major oil consuming countries such as China, India, and Japan to jointly release strategic oil reserves. Suppressing oil prices, oil prices fell sharply due to this bad news. In addition, the resurgence of the epidemic in Europe has also affected the outlook for oil demand and added to the downward pressure on oil prices.
Later in the week, international oil prices stopped falling and rebounded, and some positive factors still played a certain supporting role in current oil prices. On the one hand, crude oil consuming countries have not released reserves as much as market expectations, and some of the crude oil is temporarily borrowed and needs to be returned later, which prompts traders to expect that the balance of supply and demand will tighten in the future. On the other hand, OPEC+ believes that it is unreasonable for consumer countries to release strategic reserves and may reconsider plans to increase supply at its meeting on December 2. Before countries announced the release of oil reserves, the United Arab Emirates said there was no need for OPEC+ to increase production at a faster rate. OPEC’s cautious attitude towards supply and demand also boosted oil prices.
Crude oil spot market review this week
This week (11.18-11.24), the average spot price of crude oil fell compared with last week. In the Middle East crude oil market, Qatar Petroleum Company issued a tender to sell January-loaded Qatar marine oil and low-sulfur condensate cargoes. The tender closed on November 15 and is valid until November 16. In addition, Qatar Petroleum also tendered for the sale of three Elshahin crude oil cargoes of 500,000 barrels each, with shipping dates from January 1-10, January 11-20 and January 21-30 respectively. The tender was issued on November 1 Bids close on November 15th and are valid until November 16th. The Russian Surgut Company is bidding for the sale of three ships with 740,000 barrels each of ESPO crude oil cargoes loaded from December to January. The shipping dates are December 31-January 5, January 3-8 and January 6-13 respectively. The tender document Bids close on November 15th. In the Asian crude oil market, market players are mainly waiting and watching, and China’s crude oil imports have declined. China’s crude oil buyers responded more to their regular suppliers in October, with sharp cuts in crude oil imports, data from China’s General Administration of Customs showed on November 23. For energy security reasons, the country purchases crude oil from more than 30 different suppliers. Middle East oil producers, led by Saudi Arabia, saw their market share jump to 53% in October from 48% a year ago, but down from 55% in September. In addition, trade sources pointed out that India’s ONGC sold a 700,000-barrel cargo of Russian Sokol crude oil for January 8-14. The price was about US$7.50/barrel at a premium to Dubai’s quotation, which was the highest since January 2020. The maximum water premium. The company last sold Sokol crude oil cargo for December loading at a premium of US$5.30-5.90/barrel to Dubai’s quotation.
Analysis of factors affecting crude oil futures market
supply and demand factors
This week (11.18-11.24), on the supply side, refineries began to process more crude oil and exports also increased, indicating that demand for US oil is generally strong. The decline in crude oil inventories comes despite the U.S. releasing more than 3 million barrels of crude from its strategic reserves for the second week in a row as the Biden administration seeks to lower overall fuel costs. Overall, the increase in crude oil supply is too small. U.S. crude oil production has recovered slowly and has not returned to the level before Typhoon Aida. The crude oil gap in the market has expanded by 1.5 to 2 million barrels per day compared with the end of September.
On the demand side, the global oil industry has been slow to respond to the surge in demand in 2021, leading to soaring global energy costs and inflationary pressures. Global oil demand has rebounded to near pre-pandemic levels as economies recover and road, rail and air travel resume. Domestic and foreign institutions predict that the cold winter in the fourth quarter will cause the world to increase crude oil consumption due to gas shortages. Major institutions predict that the increase in crude oil consumption driven by the cold winter will reach 2-3 million barrels per day, mainly fuel consumption. As a result, the global crude oil gap in the fourth quarter can reach a maximum of 5 million barrels per day.
Crude oil futures market trend forecast
Market forecast for next week
On the technical chart, the price of NYMEX’s main contract crude oil first declined and then rose that week (11.18-11.24), with a fluctuation range of 2.91 US dollars, and the mainstream operating range is 79.01-76.10 US dollars per barrel. The main factors that boosted oil prices that week were: first, crude oil consuming countries did not release reserves as much as market expectations; second, large exports from the United States led to inventory declines. The main factors that suppressed oil prices that week were: first, the rebound of the global epidemic hindering economic recovery; second, the increase in U.S. crude oil inventories; and third, the United States will release 50 million barrels of strategic oil reserves. As of 24�, WTI closed at US$78.39/barrel, down US$0.03/barrel or 0.04% from the previous month; as of the week of the 24th, the weekly average price of WTI was US$77.75/barrel, down US$2.73/barrel or 3.39% from the previous month. From a morphological point of view, the KDJ indicator line extends downward near the central axis, indicating that the oil price trend is downward; the MACD indicator line extends steadily in the strong area, and the red kinetic energy column shrinks, indicating that the upward trend of oil prices has slowed down.
From a speculative perspective, speculators’ net long positions in light crude oil futures on the New York Mercantile Exchange decreased by 1.3%. In the United States this week, inflationary pressures continued to build as demand continued to strengthen and further strained supply chains. High inflation had an impact on consumer confidence, with a quarter of consumers believing that inflation has reduced their lives. Although consumers’ nominal incomes have risen, half of households expect their incomes to be lower next year, adjusted for inflation. As a result, more and more Wall Street banks are betting that the Fed will raise interest rates faster than expected, and Citigroup has joined Morgan Stanley in favoring trading strategies that can profit from the Fed’s faster rate hikes.
This week (11.18-11.24), a new wave of COVID-19 has spread rapidly in Europe recently. The epidemic situation in Austria is particularly severe. Austria has implemented “blocking” measures on people who have not received the COVID-19 vaccine since November 15. However, experts believe that this Far from enough. On November 19, the Austrian federal government announced a further upgrade of epidemic prevention and control measures after holding epidemic consultations with state governors, mainly including: a 10-day “lockdown” measure for all residents across the country starting from November 22, and then based on the epidemic The assessment of the situation may extend it for another 10 days, and return to the state of “blocking” only those who have not been vaccinated after 20 days at the latest.
On the 23rd, the White House announced that the U.S. Department of Energy would release 50 million barrels of crude oil from the Strategic Petroleum Reserve to alleviate the mismatch between oil supply and demand and reduce oil prices as the economy recovers from the COVID-19 epidemic. The U.S. Department of Energy stated that these 50 million barrels of crude oil will be put on the market as early as mid-to-late December this year, of which 18 million barrels have been approved by Congress for direct sales, and the other 32 million barrels are short-term exchanges that will be agreed upon in 2022 after oil prices stabilize. The strategic petroleum reserves will be returned by 2024. Jin Lianchuang expects that next week (11.25-12.1), crude oil consuming countries will continue to release reserves, which will put pressure on the market. However, the results of the OPEC+ meeting on December 2 will provide clearer guidance for oil prices. Taking WTI as an example, the mainstream operating range next week is expected to be between 75-80 US dollars/barrel (average 77.5), a month-on-month decrease of 0.25 US dollars/barrel or 0.32%.
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