Benefiting from OPEC+ oil-producing countries maintaining their original pace of increasing production, expectations for a significant supply recovery have been temporarily dashed. At the same time, Saudi Arabia raised its official oil selling price in December, encouraging bullish enthusiasm in the international oil market. Driven by short-term positive factors, domestic and foreign crude oil futures prices have rebounded continuously in the past two trading days. Among them, U.S. WTI crude oil returned to 82.2 U.S. dollars/barrel from 78 U.S. dollars/barrel, and Brent oil price stopped falling at 80 U.S. dollars/barrel, returning to 83.6 U.S. dollars/barrel. The main domestic crude oil 2112 contract rose 3.14% yesterday, to 532.2 yuan/barrel.
Hong Xiaoqiang, Chief of Oil Research at Zheshang Futures Research Center, believes that there are many factors that have led to this rebound in oil prices, such as the successful development of new vaccines, continued speculation in anticipation of a cold winter, and U.S. infrastructure From the perspective of short-term market sentiment, such as the approval of the plan and Saudi Arabia’s increase in official prices, demand expectations still provide certain support for oil prices.
“Last Friday, Saudi Aramco raised the official selling price of oil in all regions in December beyond expectations. Among them, the selling price of Arabian Light crude oil for Asian customers increased by US$1.4-2.7/ barrel, while the market expects a price increase of 50 cents to US$1/barrel. A higher-than-expected increase in the official selling price of crude oil will boost the market’s bullish sentiment in the short term and drive oil prices upward.” Liu Shunchang, energy and chemical analyst at Nanhua Futures, told a reporter from Futures Daily, Last week, the OPEC+ meeting maintained a moderate production increase plan of 400,000 barrels per day in December and ignored the United States’ demand for an increase in production of 600,000 to 800,000 barrels per day. The tight supply side supported oil prices.
“Although positive factors in the short-term oil market prevail, potential negative factors are also brewing. It is expected that oil prices will still oscillate at high levels in the future. Mainly.” According to Liu Shunchang, the monthly difference between WTI and Brent fell rapidly last week. When the Superback structure appeared in the early stage, the performance of oil prices was relatively flat. After the current monthly difference has fallen rapidly, the room for oil prices to continue to rise is relatively limited. At the same time, U.S. commercial inventories have risen more than expected, disagreements and games between the United States and OPEC have intensified, Iran nuclear negotiations will begin on November 29, the U.S. dollar index has risen, CFTC’s net long position has declined, options bullish sentiment indicators have fallen sharply, and Brent oil has reached resistance of $85/barrel. The average position indicates that the pressure on oil prices is increasing. Judging from the balance sheet, there is a high probability that the crude oil market will shift from a shortage of supply to a balance between supply and demand in the first quarter of 2022. The current main Brent crude oil futures contract is the 2201 contract, which is near the turning point in time.
According to a Bloomberg survey, OPEC+ increased production by 140,000 barrels per day in October, less than half of the plan, and the production reduction implementation rate reached 118%. The current increase in global crude oil supply is limited, and the United States Factors such as good demand for refined oil and refined oil products in Europe still support oil prices. Therefore, the overall price of oil has shown a high oscillation, and the pressure from above has increased. The oscillation range of Brent crude oil is between 77 and 85 US dollars per barrel.
“But from a medium-term logic point of view, this round of rising prices that started in mid-September is coming to an end.” In Hong Xiaoqiang’s view, since mid-September, WTI oil prices have broken through After US$70/barrel, a new round of strong upward trend has started. There are three main driving logics: First, the expectation of cold winter continues to ferment. Energy varieties, led by European natural gas, have been soaring. Market expectations are that when natural gas prices are high, Under the influence, fuel-fired power generation will replace part of the demand for natural gas power generation, resulting in an increase in crude oil demand of 500,000 to 1 million barrels per day.
Second, OPEC+’s lower-than-expected increase in production is also an important driver of this round of price increases. According to OPEC+’s plan, crude oil production will increase by 400,000 barrels per day starting in August. However, judging from the actual production data from August to October, the actual production of some OPEC+ countries is less than their benchmark production.
Third, the rapid rise in WTI crude oil futures caused by low Cushing crude oil inventories is one of the main logics of the recent rise in oil prices. However, recent high-frequency data shows that part of the logic that supported the rise in oil prices in the early stage has been fully traded. For example, the recent sharp drop in natural gas prices and the sharp decline in fuel cracking spreads indicate that the logic of power generation demand brought about by the cold winter is now beginning to weaken at the margin. Judging from the Brent-WTI price difference, it has now rebounded from the low level, and the decline in inventory in the Cushing area has begun to slow down, indicating that the logic of the early forced position in the Cushing area will gradually be falsified. In addition, OPEC+’s current production is lower than expected and its reluctance to further increase production has supported oil prices. However, U.S. production has begun to rebound slightly, and strategic crude oil reserves are expected to be further released.
“In general, the current short-term sentiment has caused oil prices to rebound from lows, but we believe that the early bullish logic of the oil market is now close to full trading. Before there is no further bullish driver, It is difficult for oil prices to reach new highs,” Hong Xiaoqiang said. </p
