On Friday, domestic energy and chemical futures generally fell. Among them, the main contracts of crude oil, asphalt, and low-sulfur fuel oil all fell by about 3%. The energy and chemical sector continued its weak trend in night trading.
Zhong Meiyan, director of energy and chemical products at Everbright Futures Research Institute, said that the general decline in energy and chemical products was driven by the systemic risk resonance of macro factors on the one hand. The market expects the Federal Reserve to continue its aggressive interest rate hike pace in May, and the target interest rate may still be higher. In addition, concerns about the epidemic have revived, and the market’s confidence in the continued recovery of the demand side has weakened. On the other hand, from an industrial perspective, the profits of chemical products have been compressed, and high oil prices are unsustainable. At the same time, falling oil prices have led to the spread of risks, and cost collapse logic has emerged for energy and chemical products.
Sanli Futures Energy Analyst Liu Shuangshuang believes that the market’s concerns about weak global demand have increased, and the risk appetite of the entire commodity market has declined overall. Crude oil has made a stronger correction after rising sharply last week.
This week, Brent crude oil and WTI crude oil futures fell for four consecutive days from their highs and stabilized on Friday, with cumulative declines exceeding 5%.
“The factors that currently dominate crude oil prices are mainly at the demand level and the Fed’s attitude towards raising interest rates.” Liu Shuangshuang analyzed that on the supply side, the possibility of changes following OPEC+’s strong production cuts is relatively small, although the Biden administration has recently further relaxed There are restrictions on Venezuelan crude oil, but it is subject to factors such as domestic political unrest and slow infrastructure construction. If it is relaxed, the crude oil that Venezuela can release will also be limited. With the release of U.S. consumption data and employment data, the probability of the Federal Reserve raising interest rates by 25 basis points in May has increased. However, rising oil prices are also further pushing up domestic inflation in the United States, so there are still great uncertainties in raising interest rates. . On the demand side, this month’s OPEC monthly report stated that this strong production cut is due to concerns about the demand side. There are still doubts about whether the US economy can have a soft landing. The crack price difference between Europe and the United States has weakened. In addition, this week’s EIA refined oil inventory has accumulated slightly. The side shows that the demand side is weak.
Zhong Meiyan believes that the main factors currently affecting oil prices include the actual intensity of OPEC+ production cuts, Western countries’ sanctions against Russia, the sustainability of China’s demand recovery, and macroeconomic sentiment. From the perspective of the overall oil price driver, there are many factors in the market game this year and few resonance factors, and oil prices will show a pulsating trend. In the short term, there is a periodic demand for correction in crude oil, especially before the next Federal Reserve interest rate meeting. The market will continue to be cautious, and oil prices will mainly cover the gap downwards. After that, we need to pay attention to the degree of macro risk resonance. The production data at the beginning of next month will also be a time point to test the determination and quality of OPEC+ to reduce production.
“Judging from the current supply and demand in the crude oil market, if OPEC+ implements the production reduction plan until the end of the year, it is relatively certain that the overall supply and demand in the crude oil market will be tight. Based on this, it is difficult for oil prices to continue to decline. Now oil prices have fallen back to the first quarter oscillation range. The recent rapid decline in oil prices is an adjustment to the previous sustained rise, and there is a high probability that it will still be dominated by high oscillations in the future.” Liu Shuangshuang said that in the future, we need to pay attention to the implementation rate of OPEC+’s production cuts and the Federal Reserve interest rate meeting in May.
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