As the OPEC+ alliance of oil-producing countries maintains a “moderate supply” attitude and U.S. inventory declines, crude oil prices have risen for the longest consecutive week since 2015. Analysts said that the core factor affecting crude oil and even the entire energy and chemical sector is whether the global energy shortage crisis can be effectively alleviated. In the short term, oil prices are expected to maintain a strong operating trend, but fluctuations may further intensify. As of early morning today, WTI crude oil futures closed up 1.79% at $83.98 per barrel. Brent crude oil futures closed up 1.37% at $85.77 per barrel.
On the evening of October 22, U.S. President Biden said that Americans should expect high gasoline prices to continue into next year, given that OPEC and other oil-producing countries control production. In addition, inventories at the largest U.S. crude oil storage center fell to levels last seen when oil prices hit $100 a barrel.
Analysts believe that the main reason for the sharp rise in international oil prices this week is that on the one hand, the market is worried that consumption is growing faster than supply; on the other hand, shortages of natural gas and coal are triggering concerns about oil Additional demand for the product. In addition, OPEC and its allies once again failed to meet their production targets, exacerbating supply shortages as the world recovers from the coronavirus epidemic.
“The current crude oil market is in an upward trend with limited supply and growing demand.” Liu Shunchang, an energy and chemical analyst at Nanhua Futures, told a reporter from Futures Daily that from the supply side, in September The implementation rate of OPEC+ production cuts is 115%, and OPEC+ crude oil production growth is lower than expected. U.S. crude oil production was severely damaged after Hurricane Ida at the end of August, and global crude oil supply growth was slow and lower than expected. From the demand side, demand for refined oil products is strong. Currently, demand for gasoline and diesel has returned to pre-epidemic levels, while demand for aviation kerosene is slightly lower than before the epidemic. At the same time, the energy crisis has pushed up power generation demand for crude oil, which is expected to continue in the fourth quarter and the first quarter of next year. Therefore, the crude oil market is in a situation of tight supply and growing demand, pushing up oil prices.
“The current energy crisis is still ongoing. Although the Nord Stream 2 pipeline has begun to supply gas, license issues and low domestic inventories in Russia limit gas transmission. At the same time, La Niña Expectations continue to strengthen. The probability given by NOAA is close to 90%, which means that the probability of a cold winter this year is high, and natural gas prices are expected to remain high. The International Energy Agency (IEA) predicts in its latest energy outlook that high prices for natural gas and coal will stimulate crude oil prices. Demand for power generation, reflected in the strengthening of diesel and fuel oil crack spreads and oil prices, is expected to push up crude oil demand by about 500,000 barrels per day in the fourth quarter of this year and the first quarter of next year,” Liu Shunchang said.
Fitch Ratings International, one of the world’s three largest international rating agencies, said on Friday that the main economic factors that boosted commodity prices after the epidemic are receding. After a sharp surge in demand for durable goods during the anti-epidemic lockdown, the growth rate of global industrial output is currently falling “significantly”. More importantly, as the Federal Reserve is about to reduce its holdings, the U.S. dollar exchange rate strengthens, which will make all commodities priced in U.S. dollars (including oil, natural gas, soybeans, copper, etc.) more expensive. This has led to more divergent commodity price trends, with energy prices continuing to soar but some metal prices falling. </p
