There is only one day left before the OPEC+ meeting that the market is paying attention to. For the market, this meeting will determine whether OPEC+ countries will continue to increase production and the extent of the increase, which will undoubtedly affect the direction of future changes in international oil prices. However, before the OPEC+ meeting, market uneasiness finally triggered a correction in crude oil prices, which was also a relatively large adjustment after the recent upward trend. All interviewees said that after the sharp rise in international oil prices in the early stage, a correction has become inevitable. In addition, there are currently many factors affecting oil prices, and future trends will still face greater uncertainty.
“Judging from the information currently disclosed in the market, the probability of reaching an increase in production at this OPEC+ meeting is quite high. The current tight supply in the crude oil market is becoming increasingly obvious. According to a report submitted to the United Nations The technical committee’s forecast shows that the supply gap in August will be about 1.7 million barrels per day, and the gap in the second half of the year will average 1.9 million barrels per day. The committee will review and possibly confirm these forecasts.” Yang An, head of energy and chemical R&D at Haitong Futures, said, The alliance is widely expected to agree to increase supply at Thursday’s meeting, but the amount remains uncertain.
Yang An said that at this stage, under the influence of the Delta mutant strain, the road to global economic recovery is still bumpy, and the market mentality may become cautious. Saudi Arabia has said it is prepared to intervene to help moderate inflation but will only proceed with caution as the market outlook remains fragile. The recurrence of the epidemic and the prospect of Iran’s resumption of exports have made OPEC+’s estimation more difficult.
“At present, the market generally believes that this OPEC+ meeting will decide to increase production, but there are certain differences on the extent of the increase. Russia’s position is that the extent of the increase should be appropriately expanded , but Saudi Arabia has always maintained a relatively cautious attitude. According to the previous production increase schedule, this meeting will focus on increasing production by 500,000 barrels per day.” said Yu Pengsen, an energy and chemical analyst at Zhaojin Futures.
According to Matt Weller, a senior analyst at GAIN Capital Group, OPEC+ has promised to increase production by 2.1 million barrels per day from May to July. In addition, although OPEC+ may make adjustments to the July plan, it is more likely to fine-tune the August production plan at this week’s meeting. According to Reuters estimates, OPEC’s latest forecast shows a supply gap of 1.5 million barrels per day in August, so the organization has good reason to further increase production to meet growing demand. The International Energy Agency (IEA) predicts that the crude oil gap will be more serious in the third quarter, reaching 4.6 million barrels per day.
“Several investment banks expect OPEC+ to increase production by 500,000 barrels per day starting in August. This increase in production may still lead to insufficient supply in the global oil market and may provide support for higher oil prices. Since traders are focusing on the August production increase of 500,000 barrels per day, if the increase is less than expected, it may be good for oil prices; conversely, if the production increase reaches 750,000 barrels per day, it may have a short-term negative impact on oil prices .” said Matt Weller.
In fact, OPEC+’s decision to increase production will have an important impact on the supply and demand situation of the crude oil market in the second half of the year, which will also determine the performance of oil prices to a large extent. Yang An said that judging from the current attitude of oil-producing countries, they still hope to maintain oil prices at a suitable high level, rather than causing oil prices to surge due to insufficient supply. However, once the OPEC+ meeting’s final production increase plan does not exceed expectations, it is likely to attract bulls again Push up oil prices.
In Yu Pengsen’s view, if this OPEC+ meeting decides to increase production by 500,000 barrels per day, the actual impact on the market will be relatively small, but where will the increased crude oil go? Extremely critical.
“According to the currently released data, global crude oil demand is in a continuous recovery stage, but the degree of recovery in each region is different. The current major crude oil demand recovery areas are, first, the United States. North America, led by the North American region, and East Asia, dominated by China, Japan and South Korea, have all recovered to 90% or above the level of normal years. However, the recovery of demand in Europe, another major crude oil demand place, is not satisfactory, while the rest of the world In this region, demand has never picked up and is still low.” Yu Pengsen said that at present, the major result of OPEC+ production reduction is to effectively reduce the normal crude oil inventory of the OECD, but mainly to reduce the U.S. crude oil inventory. in stock. For the U.S. market, the actual production of U.S. crude oil is still 1.8 million barrels per day lower than the peak before the epidemic. After entering the summer oil consumption peak, U.S. crude oil and refined oil inventories have continued to decline, and the market has improved significantly. However, the market conditions in Northwest Europe, the main pricing location for Brent crude oil, are relatively weak. This can be seen from the recent continued narrowing of the price difference between WTI crude oil and Brent crude oil.
“If the 500,000 barrels/day of increased crude oil production flows to North America, there will not be much of a problem. After all, the demand gap for crude oil in the United States is still relatively large. There is no sign of increased production of shale oil. However, if it mainly enters the European market or the East Asian market, it will cause a regional oversupply in the nearly saturated market, thus lowering the price of crude oil in some regions. Brent crude oil and WTI The price difference of crude oil may continue to narrow, and there may even be a situation where the price of WTI crude oil is higher than that of Brent crude oil.” Yu Pengsen said.
“In the medium term, the world still has a crude oil supply gap of 1.5 million to 1.8 million barrels per day. This increase in production by 500,000 barrels per day will have a relatively small impact on the market. , it can be said that it has not been completely twisted.Transfer the imbalance between supply and demand. However, the impact on the market mentality is not small. If OPEC+ maintains a monthly production increase of 500,000 barrels per day, the current market gap will be basically completely filled in October and November, achieving a balance between supply and demand. However, it should be noted that winter is a relatively off-season for oil consumption. Whether the market can maintain the current demand for crude oil in winter is still an unanswered question. If the global economy recovers further and market demand may increase again, the current scale of production increase will still not be enough to make up for the demand gap. However, if the market experiences a decline in winter demand, then oversupply will reappear in December, which will be a problem that the market needs to consider. “Yu Pengsen said.
Yu Pengsen admitted frankly that there are still many problems facing oil prices in the future. “Now the price of crude oil has risen for several consecutive months, and has even exceeded It remains to be seen whether the price increases brought about by the contraction on the supply side can be sustained for a long time at pre-epidemic levels. In addition, the current price difference between WTI crude oil and Brent crude oil continues to shrink. Will the price of WTI become higher than Brent again? For the United States, if this situation occurs, it means that U.S. crude oil, natural gas and other energy prices are leading the rise, which is a very serious inflation signal and will inevitably trigger a series of policies by the Federal Reserve. For OPEC+, the established production restrictions will end in March next year. It is still unknown whether the global crude oil market can be restored to a higher level before March next year. Especially the current crude oil price has put many non-OPEC+ oil-producing countries in the profit stage. You must know that although OPEC+ has a strong say in the market, nearly 55% of the crude oil supply is not within its production limit series. If these The large release of crude oil in advance has an impact on the market that cannot be underestimated. Taken together, the current oil price has reached a stage where the benefits are almost exhausted, and the oil price has surpassed the pre-epidemic level, and has reached the high point expected by many institutions at the beginning of the year, and there is a high probability that an adjustment will occur. ” He said.
In terms of the absolute price of crude oil, Brent crude oil price has touched US$76/barrel, and WTI crude oil has also exceeded US$74/barrel. It can be said that the current oil price It is no longer low oil prices, but has entered the high oil price area. Yang An said that compared with the oil price of 50-60 US dollars per barrel, which is relatively comfortable on both the supply side and the demand side, the current absolute price of oil is a bit high. , which is why many institutions predict that oil prices will most likely return to around US$60/barrel in 2022.
“The sharp rise in oil prices is the core factor causing inflation. If oil prices continue to rise, , the future impact on demand growth and global economic recovery should be deterministic, so from a macro perspective, this may put pressure on the Federal Reserve to tighten liquidity in advance to curb oil price performance in order to control inflation. In addition, the United States has repeatedly communicated with Saudi Arabia regarding high oil prices, requiring it to manage the balance of supply and demand in the crude oil market. At present, it seems that Saudi Arabia will also consider the impact of high oil prices on the United States and try to maintain a rough balance between supply and demand in the crude oil market. balance. “Yang An said.</p
