Crude oil has been negative for four consecutive weeks, and the drop in oil prices in the past week set a new eight-month record, with WTI crude oil falling by more than 6%. The most important news in the crude oil market recently is that the United States has vigorously called for the release of strategic reserve inventories of major consuming countries. This issue has also directly caused investors to worry about prices. Although the EIA data this week is relatively good, given that the United States The attitude towards high oil prices still makes bulls feel a chill behind them. If you sort out this week’s news, you can find that the United States does not seem to have found a firm ally when it comes to using reserve inventories to lower oil prices.
Sources said that the United States may release crude oil reserves in the form of sales or borrowing. The United States requires India, Japan and South Korea to release oil reserves, but does not require European countries to release them. South Korea’s Industry Ministry said South Korea has received a request from the United States to release oil reserves in response to rising oil prices. Market sources said that Japan and South Korea confirmed the United States’ request for coordination on oil issues. A White House spokesman said that no decision has been made on releasing oil reserves.
According to foreign media reports, the United States needs to release 20 million to 30 million barrels of crude oil reserves in order to get a response from OPEC. JPMorgan Chase said it was “extremely unlikely” that countries around the world would coordinate the release of strategic oil reserves. Analysts said the United States appears to be the only IEA member country looking forward to releasing oil reserves. However, the report said that with rising inflation and pressure from U.S. Senate Democrats, the White House will ask the Energy Department to implement a replacement agreement, speed up mandatory sales, or a combination of both. The replacement of large quantities of reserve oil may bring the current oil delivery volume in the United States to 30 million barrels, and then exchange it back when the supply returns to normal. The U.S. Department of Energy may also accelerate the sale of 18 million barrels of crude oil, which they originally planned to complete in the next three years. The White House has several options on hand to immediately release crude oil into a glutted market and is likely to choose at least one of them.
The EIA report shows that as of the week of November 12, the U.S. Strategic Petroleum Reserve was at its lowest level since June 2003. The strategic petroleum reserve decreased by 3.2 million barrels last week. This news is also quite interesting. From the perspective of export levels, it seems that part of the released reserve inventory is used for export. In this case, it is difficult to achieve the purpose of lowering crude oil prices.
In fact, judging from the inventory data alone, this week’s data performance is pretty good. Crude oil inventories decreased by 2.1 million barrels last week, gasoline inventories decreased by 700,000 barrels, and refined oil inventories decreased. 820,000 barrels, and full-bore inventories fell by more than 3 million barrels. At the same time, U.S. crude oil production decreased by 100,000 barrels, and exports increased by 570,000 barrels per day. U.S. crude oil exports were the highest for the week since August, which is also a major factor in the decline in inventories. In addition, the strategic petroleum reserves of the United States are at their lowest level since June 2003, and the inventory performance is not bad.
If the United States can persuade Japan, South Korea or India to release strategic reserve inventories, it will be equivalent to the conflict between traditional demand countries and traditional supplier countries. serious confrontation. Supplier countries led by OPEC+ do not want to increase crude oil production at this time. Saudi Arabia even came out and said, “In December and the first quarter of next year, crude oil inventories will be accumulated, so the market does not need OPEC to produce too much.” of crude oil to balance the market.”
For major demand countries led by the United States, it seems difficult to significantly increase the country’s crude oil production. As a supporter of green energy, Biden does not want the United States to Crude oil production has increased significantly. Therefore, there are only two ways to put pressure on OPEC+ and release reserve stocks. Putting pressure on OPEC has proven to be of little use, and OPEC will not follow Biden’s suggestions, so the only effective weapon left is the release of strategic reserves. If the strategic reserves are to be released, the United States needs to involve other more important countries to release them together. Otherwise, if the United States alone releases reserve stocks, it is likely to release as much exports as the market did last week, and it will not happen in a short period of time. It has a huge impact on the fundamentals of the crude oil market. Therefore, when OPEC refuses to listen, it depends on how much influence the United States has over countries such as Japan and South Korea.
To put it another way, the countries that the United States has roped in to release reserves are all big demand countries. Countries such as Japan, South Korea, and India are all very different from the United States. The United States is currently the largest producer of crude oil in the world. In the highest countries, no matter how crude oil prices change, costs and profits flow within the country. However, Japan, South Korea, and India are traditional large importing countries. If oil prices continue to surge after a large number of reserve inventories are released, these countries will have to consider the consequences. Moreover, reserve stocks are emergency stocks to deal with emergencies. Every country will have certain reserves and will not intervene on a large scale just because oil prices are too high. Even if it is an intervention, it is hard to say how much effect these stocks can play. , so this is also the main reason why Japan and South Korea failed to respond to the United States in the first place.
From a geopolitical perspective, the United States has been shouting, but it has not substantially released its reserves. After all, in the Trump era, the United States has been on the issue of crude oil production. With the help of Saudi Arabia, Saudi Arabia spared no effort to significantly increase its�, thereby ruining the results of the previous production reduction, and the price of crude oil also fell from US$80/barrel to US$50/barrel. If, after the United States and its subordinates release a large amount of reserves, Saudi Arabia and Russia join forces to create obstacles for the United States and continue to push up oil prices, the United States will be quite passive. By then, not only will it be difficult to increase production, but it will also be unable to even release inventories. The United States will We can only watch helplessly as high oil prices continue to push up domestic inflation. In addition, at a time when the United States is eager to subdue Russia, it does not want to give up its oil price weapons. This is why the United States is anxious about releasing reserve inventories.
In addition, returning to the most real situation, how much reserve inventory can these countries release? According to satellite data, India’s current onshore inventory is near the lowest level in more than five years. Japan’s onshore inventory has been declining for more than five years. The current inventory level is the lowest in five years. South Korea’s onshore inventory is similar to India’s, also in the five-year period. The lowest value in many years. These inventories include not only the strategic reserve inventory, but also the normal commercial inventory of the refinery, so the actual strategic reserve inventory is lower.
The same is true for the onshore inventories of the United States. Currently, the United States has about 430 million barrels of onshore commercial crude oil reserves and 620 million barrels of strategic reserves. If the United States really wants to make a desperate move to suppress oil prices, It is also confident, but the United States does not want to bear all the responsibility now, and emergency approval of large-scale reserve inventory releases is not in line with current practical interests. Therefore, the United States is seeking to win over other countries to suppress oil prices.
It can be seen from the global onshore inventory trend chart that the process of large-scale accumulation of global inventories due to the impact of the epidemic has ended, and the current onshore inventory levels have returned to before the epidemic. According to Saudi Arabia’s predictions, there will be a global accumulation of reserves in December. Perhaps even if the United States does not release strategic reserves, as long as it can maintain oil prices from rising sharply through expected means, Biden seems to be able to wait for seasonal factors to drive down oil prices.
The same is true for shore stocks, Not to mention the global floating tank inventory, the current global floating tank inventory level is also close to the level before the epidemic, and is within the historical normal range. The floating tank inventory in Asia has also remained stable. The global destocking caused by OPEC production cuts has been confirmed. The effect is obvious.
Therefore, at the current stage when fundamentals remain relatively stable, the United States’ attitude towards the market is crucial. If the United States persists in threatening the market in recent times, , I am afraid that bulls will still be more wary, and then crude oil prices will naturally have no basis for a sharp rise. However, if the United States remains at the verbal stage without taking substantive actions, I am afraid that short sellers will not dare to significantly suppress prices, and oil prices will rise again. into the oscillation stage.
However, the current market still needs to pay attention to the potential negative effects brought by the epidemic. Although the epidemic level has not risen to the mainstream trading logic for the time being, according to the law of the development of the epidemic, There are obvious regularities in the peaks and troughs of the epidemic since 2021. Whether it is an increase or a decline in the number of new confirmed cases in a single day, the process in between is 2 months. Based on this time, the number of new confirmed cases in a single day in this round of global epidemic will be The peak of growth will appear in December, which means that the last month has been a period of fermentation of the epidemic, and it is not ruled out that the market’s focus will return to the epidemic.
In addition, negotiations on the Iran issue will also be held at the end of this month. Although the West shows an attitude of wanting to solve the problem, Iran also takes this attitude into account, so Iran The price will definitely be raised. As for whether the United States can accept it, we still need to wait for the two sides to actually sit down and negotiate. However, the United States can use the expectation of negotiations to further suppress crude oil prices, continue to drag down crude oil bulls, and give U.S. inflation some breathing space.
On the whole, as time enters the end of the year, global demand has slowed down to a certain extent, but as OPEC continues to control supply, the market will To maintain a relative balance, if you want to break this balance, it depends on how determined the United States will be. Whether it is to win over other countries to significantly release strategic reserve stocks or lift sanctions on Iran, it can break the balance. Therefore, in the United States When oil prices are pushed down as hard as possible, the uncertainty of the future market will increase and market volatility will also increase. Investors also need to pay attention to market risks and beware of sudden news that significantly suppresses oil prices. </p
