Unlike Friday, when 9 varieties fell to the limit during the day, most commodities began to rebound on Friday night, and the one that surprised the market the most was domestic asphalt. Futures opened close to the daily limit, while the crude oil sector was almost overall stronger, which also affected global oil prices. In the end, Brent and WTI crude oil both closed at intraday highs on Friday, with an increase of more than 2%, reversing the previous decline in one fell swoop. The domestic refined oil market continued to be hot on Saturday. Major local refineries generally made two or three adjustments to the prices of gasoline and diesel. Some refineries increased the cumulative price of their products by more than 300 yuan/ton, causing crude oil and downstream prices to rise. The reason for the sharp fluctuations in oil prices is an announcement jointly issued by the Ministry of Finance, the General Administration of Customs, and the State Administration of Taxation on the imposition of import consumption tax on some refined oil products. This announcement announced the levy of consumption tax on diluted asphalt, light cycle oil, mixed aromatics and other products that have been highly concerned by the market. This will directly drive up the operating costs of some refineries in China. At the same time, some import demand may be converted into demand for crude oil. This will It directly promoted the sharp rise in crude oil, asphalt futures prices and domestic refined oil market prices. This news is still being digested by the market. Through the crude oil price market reaction to this news, we can see the impact of China’s demand on the international crude oil market. The influence is getting stronger.
In addition to the strong rebound in oil prices triggered by China factors, the biggest disturbing factor in the market this week is that the U.S. refined oil pipeline was hacked last weekend, leading to the termination of the pipeline run. Colonial Pipeline operates the largest petroleum product pipeline system in the United States and is the most important oil and gas artery in the eastern United States. It is also the main source of gasoline, diesel and aviation fuel for the East Coast. The 5,500-mile pipeline system runs between Houston, Texas, and Linden, New Jersey, transporting more than 2.5 million barrels of fuel per day, which accounts for approximately 45% of all fuel consumption on the densely populated U.S. East Coast. Concerns about supply shortages have intensified following the continued closure of the Colonial Pipeline. Although operations have begun to resume, the impact on vast areas of the eastern and southern United States continues. Gas stations are still in short supply and it may take several days to return to normal. Biden called on Americans to “buy what you need and don’t hoard.”
Totally disrupted. Previously, the international oil price suffered setbacks when it hit $70 per barrel, and then oscillated weakly. Without the extreme event of pipeline interruption, crude oil prices are expected to remain in a weak oscillation pattern. However, entering the U.S. trading stage, crude oil bulls did not seem to want to use this incident to hit the $70/barrel mark, and finally closed a cross star that day.
In the following days, the crude oil market has always been in a tangled state, with bulls and shorts competing with each other and frequently closing long upper and lower leads. This state was finally broken on Thursday night, when the crude oil market fell by US$2/barrel that day, creating the largest single-day decline in more than a month. Also on this day, U.S. pipeline companies announced that they had hacked hackers and paid a ransom of up to $5 million, and U.S. refined oil shipments were gradually resuming. The bulls took advantage of this incident to only stabilize the price of crude oil from falling sharply, but they have never been able to launch an upward attack. This also shows that the current market does not support the sharp rise in crude oil prices, and market sentiment is not high.
New variables in the US market
The reason why oil prices are falling is also inextricably linked to the economic data of the United States. The CPI data released by the United States this week shows that whether it is the overall CPI or core CPI of the United States, the growth rate in April was “astonishing” “. Among them, the overall CPI of the United States in April increased by 4.2% year-on-year, significantly exceeding the previous market expectation of 3.6%, and the growth rate hit a new high since September 2008; the core CPI increased by 3% year-on-year in April, the largest increase since January 1996. . In terms of items, energy prices and service prices dominated the CPI growth this time.
The sharp increase in U.S. CPI has triggered market concerns about U.S. inflation. If the inflation problem continues, the Federal Reserve may introduce policies to curb possible hyperinflation. The best way to curb inflation is to raise interest rates, which is not friendly to the current U.S. economy. After the data was released, the U.S. dollar index rose sharply, U.S. stocks plummeted one after another, and the market was in panic. In fact, the Federal Reserve has declared in public more than once that it is unrealistic to raise interest rates in the short term. As the U.S. economy gradually recovers, raising interest rates means that the recovery will slow down, which is something the Federal Reserve does not want to see.
Surveys show that economic professionals still generally believe that the Federal Reserve will not begin to reduce the scale of quantitative easing until the first quarter of 2022, and the single-month CPI data is higher. It is not enough for the Fed to change its policy path. Only when the U.S. PCE inflation rate remains above a high of 2.8% will the Fed have more concerns about inflation. The survey also showed that the U.S. economy will grow by 6.5% and 4.1% this year and next, higher than the 6.2% and 4.1% forecast in April.
In addition, Biden’s 2 trillion base�The stimulus plan has also encountered some resistance, with Republicans opposing tax increases due to infrastructure policies. Biden said that he is ready to make concessions, so the US$2 trillion stimulus policy may have to be discounted. The market will not care too much about how much will be implemented in the end. As long as it is less than US$2 trillion, the market will will be interpreted as a negative factor.
When will the epidemic get better
The epidemic data has improved slightly this week, but the overall trend of high new numbers is still maintained, especially in India, where the epidemic is still relatively serious. As of May 14, the number of newly confirmed cases worldwide in a single day reached 740,000, a slight decrease compared with the same period last week. Among them, the United States had 36,000 new confirmed cases that day. The data is still declining. India’s newly confirmed cases that day 360,000 people, a decrease from last week’s 390,000 people, but the overall data is still relatively high. There were 62,000 new confirmed cases in Brazil in a single day, a slight increase compared to the same period last week.
The extent of vaccination, global vaccination reached 21 million doses in a single day, of which China vaccinated 8.3 million doses in a single day, an increase compared with last week’s data More than 1 million doses/day are still accounting for one-third of the global data. The United States has vaccinated 2.19 million doses in a single day, which is basically the same as last week. India has vaccinated 2.3 million doses in a single day, an increase of 500,000 doses/day from last week. .
On the issue of vaccines, there have been frequent problems with vaccines in the West recently, and some countries have directly suspended the vaccination of some vaccines, which has made the already poor vaccine even more scarce. . At present, we have also noticed that on the issue of global joint anti-epidemic, most countries in the Western camp are still relatively hostile to China, as well as our neighboring countries, Japan, South Korea, and India. Although these countries are still suffering from the pain of the epidemic, despite the efforts of the West, The vaccines are simply not enough for these countries. However, due to pressure from Western countries and other reasons, these countries have never used China’s power to fight the epidemic.
As Western countries encounter various problems with vaccines and insufficient production capacity, Biden is seeking to give up vaccine patents, which in itself is critical to the global fight against the epidemic. It was said to be a good thing, but then the next day the WHO announced that China’s vaccine would be included in the “emergency use list.” On May 6, local time, U.S. President Biden announced his support for giving up patents on COVID-19 vaccines. On May 7, local time, WHO Director-General Tedros Adhanom Ghebreyesus announced that the COVID-19 vaccine developed by China Sinopharm Group’s Sinopharm Beijing Institute of Biological Products would be included in the list of “Emergency Use List.” China’s vaccine is the first vaccine in the world to be successfully developed and put into clinical trials. Currently, hundreds of millions of doses have been administered around the world with no obvious adverse reactions. Judging from the reactions abroad, China’s vaccine is also effective and kills people. Live vaccines are also technically more mature than MRNA, but for such an excellent vaccine, the WHO waited for the United States to announce that it would give up its vaccine patent before including it in the “emergency use list.”
If the United States really liberalizes vaccine patents, it is actually a moral hijacking. China has also liberalized patent rights on vaccines. The problem facing the West now is vaccines. There are various risks, and the West has insufficient production capacity. If China also gives up its vaccine patents, then Western countries can legitimately obtain cheaper Chinese vaccines with greater production capacity through the WHO channel. It is true that when it comes to vaccines, China is willing to cooperate with all countries around the world to fight the epidemic. China also hopes that the global epidemic can end as soon as possible, but what the West does is simply disgusting!
EIA reports started to be cautious
This week, the EIA and OPEC monthly reports were released, this issue The EIA report is slightly pessimistic. EIA even believes that the current crude oil price is close to the top range in the next two years. According to EIA forecast, the average price of Brent crude oil in the second quarter of 2021 will be US$65/barrel, and in the second half of 2021 It will be US$61/barrel and US$61/barrel in 2022.
It can be seen from the EIA’s supply and demand balance sheet that in the second quarter, the global crude oil market supply and demand are still in a tight state, but as prices rise after With the release of production capacity and OPEC+ easing production cuts, EIA predicts that the crude oil market will be in a supply-demand balance stage from the third quarter until 2020. At this stage, crude oil prices will not increase significantly. It can also be seen from EIA’s time-point forecast for future prices that EIA does not expect crude oil bulls to make any major moves in the future. However, EIA data’s inventory forecasts are basically consistent with other agencies. It is expected that both OECD inventories and US crude oil inventories will be on a downward trend in the coming period.
In the short term, after oil prices weakened on Thursday, they strengthened again on Friday. The current market is still in a tangled market, and China has begun to call for control of commodity prices. At the time, there was a clear correction in international commodities. However, after the Ministry of Finance announced yesterday that it would increase import tariffs on refined oil, the domestic energy market opened sharply, with asphalt opening close to the daily limit. Domestic fuel oil, LPG and other products that were greatly affected also began to open. After a sharp rise, other chemical products also rose under optimistic expectations, which even led to a strong trend in crude oil prices. In the short term, import taxes will definitely have a greater impact on downstream products, but upstream crude oil prices still need to be treated with caution.
The current market is still in a tangled market. When China began to control commodity prices, there was a clear correction in international commodities. However, after the Ministry of Finance announced an increase in import tariffs on refined oil yesterday, the domestic energy market opened sharply and asphalt prices soared. Close to the daily limit opening, domestic fuel oil, LPG and other products that have been greatly affected have also risen sharply. Other chemical products have also risen under optimistic expectations, which has even led to a strong trend in crude oil prices. In the short term, import taxes will definitely have a greater impact on downstream products, but upstream crude oil prices still need to be treated with caution.
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