Last night, oil prices suddenly collapsed in both internal and external markets.
During the night session, the decline of domestic crude oil varieties expanded. The main contract of SC crude oil fell by 4.00% during the day, the low-sulfur fuel oil (LU) fell by more than 3%, and the main contract of fuel oil fell by more than 2%. As of the close of the night, SC crude oil fell by nearly 4%, low-sulfur fuel oil (LU) fell by more than 3%, and fuel oil fell by more than 2%. In terms of external trading, WTI crude oil once fell by more than 4%, and Brent crude oil fell by more than 3% during the day.
Saudi Arabia gives “reassurance”: It will extend the oil production agreement, implying that it will not increase production to make up for the shortfall in Russia
According to the latest report from Reuters, Saudi Arabia’s Energy Minister Abdulaziz bin Salman said that OPEC+ plans to continue the existing oil production agreement until the end of 2023.
According to reports, Abdulaziz said in an interview with the media on Tuesday, “The agreement we reached in October last year will remain unchanged for the rest of this year. We need to ensure that these positive signals in the market can be sustained. ”
It is reported that on October 5, 2022, the Saudi-led Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing countries such as Russia decided to reduce total production by an average of 2 million barrels per day starting from November 2022, and set it to 2023. Fixed production targets are set throughout the year.
Market analysts said that the Saudi Energy Minister has repeatedly mentioned that the quota should remain unchanged, and the latest remarks are the firmest so far. Last week, two representatives of OPEC+ members revealed that although Russia planned to cut oil production by about 500,000 barrels per day, they did not plan to take any action to make up for Russia’s production cuts.
In this regard, Li Jie, a senior researcher in the energy and chemical industry of CCB Futures, told reporters that OPEC’s February report data showed that OPEC’s crude oil production in January 2023 decreased by 36,000 barrels per day month-on-month, with an excess production reduction of 931,000 barrels per day, mainly due to excessive production reductions in Nigeria and Angola. 406,000 barrels per day and 300,000 barrels per day. The output of the three exempted countries has basically remained unchanged month-on-month, and OPEC supply is still tight.
G7 price limit makes Russian crude oil buying more and more, market participants: crude oil supply and demand expectations have changed
An International Energy Agency (IEA) official revealed that Russia’s falling oil revenue shows that price caps and other sanctions imposed by Western countries are having the desired results, even though Russia has been able to redirect its oil products outside Europe.
“Russian oil revenues have fallen by 48% this year, and in that sense the price cap has had the desired effect,” Toril Bosoni, head of the IEA’s oil industry and markets unit, said on Wednesday.
Bosoni said Russia’s oil exports and production in recent months have been “much better than expected.” The IEA said Russia is already shipping crude oil to Asia, and the G7 price cap appears to be helping Russian oil sales because Russia has to sell oil at a lower price to countries that comply with the price cap.
The agency said in the report that Russia’s daily output in January fell by “only” 160,000 barrels from pre-conflict levels, while Russia exported 8.2 million barrels of oil to the market every day.
In this regard, Li Jie, a senior researcher in the energy and chemical industry of CCB Futures, said that shipping data showed that Russia’s total oil exports in January increased by nearly 300,000 barrels per day month-on-month, almost hitting a new high since February 2020, mainly due to a rebound in crude oil exports. . Crude oil exports to the EU fell from 3.9 million barrels per day before the conflict to 1.3 million barrels per day, of which 600,000 barrels per day were shipped by sea. Crude oil exports to China increased by 300,000 barrels per day month-on-month to 2.1 million barrels per day, reaching a record high. After the implementation of EU sanctions, the export volume of refined oil products remained stable at approximately 3.1 million barrels per day. Among them, exports to the EU dropped from 1.2 million barrels per day to 740,000 barrels per day. The largest decline was diesel, which dropped from 750,000 barrels per day in December 2022 to 470,000 barrels per day. Exports of refined oil products to the Middle East and Latin America have increased. Taking into account the month-on-month rebound in Russia’s actual exports in January, EIA raised its forecast for Russian crude oil supply in 2023 and 2024 by 400,000 barrels per day month-on-month. EIA previously predicted that after the EU sanctions against Russia began, Russian supply may continue to fall due to the impact of shipping capacity. However, judging from shipping data, Russia’s oil product exports in January exceeded the level of November last year. The impact of sanctions was relatively limited, so the sharp increase It raised its supply expectations for Russia. The IEA also raised its supply forecast for Russia in the first quarter by 500,000 barrels per day from the previous quarter, and in the second, third and fourth quarters by 20, 20 and 100,000 barrels per day respectively. Russia’s actual supply reduction will be lower than the three major agencies’ previous expectations.
On the macro front, according to Li Jie, U.S. retail data exceeded expectations and the economy may continue to overheat. The market is worried that the Federal Reserve will further raise interest rates to curb demand. The Federal Reserve observation data shows that the probability of raising interest rates by 50bp in March has increased, from 9 before the release of retail data. % rose to 18% on the 17th, and the probability of raising interest rates by 25bp was 81.9%. In a previous interview, Federal Reserve Chairman Powell once again emphasized his determination to bring the inflation rate back to 2%. It will be necessary to continue to raise interest rates in the later period, and interest rates may reach a peak higher than previously expected.
“From a fundamental perspective, the U.S. EIA expects crude oil production to reach 12.49 million barrels per day in 2023, an increase of 80,000 barrels per day from last month’s forecast and a year-on-year increase of 590,000 barrels per day from 2022. Capital expenditures of upstream companies It is more cautious and continues to restrict the growth of U.S. crude oil production. On the demand side, EIA predicts that global crude oil demand will increase by 1.1 million barrels per day year-on-year in 2023 and 1.8 million barrels per day year-on-year in 2024. The main growth will come from China and non-OECD countries. Total global demand base in 2023There has been no adjustment at all. The main reason is to lower the demand in the first half of the year and increase the demand in the second half of the year. In China, EIA predicts that after China’s epidemic prevention policy is relaxed, crude oil demand will increase by 700,000 barrels/day year-on-year in 2023 and 400,000 barrels/day year-on-year in 2024. However, it is worth noting that the EIA’s increase in China’s crude oil demand mainly occurred in the third and fourth quarters of 2023, while the demand expectations for the first and second quarters were lowered by 430,000 barrels/day and 230,000 barrels/day respectively. The IEA raised its crude oil demand forecast for 2023, by 500,000 barrels/day and 300,000 barrels/day in the first and second quarters respectively. The IEA predicts that my country’s crude oil demand is expected to increase by 900,000 barrels per day year-on-year in 2023, accounting for 45% of the global increase. Overall, market supply and demand expectations have changed, and oil prices are mainly operating in oscillations. “Li Jie said.
Yide Futures analyst Chen Tong said that on the one hand, the shadow of monetary tightening and potential economic recession in the United States and Europe is lingering on crude oil demand. Russia’s crude oil production and exports have shown stronger than expected resilience to Western sanctions. In the first quarter, There is a slight surplus in crude oil supply and demand; on the other hand, OPEC+’s existing production reduction agreement remains unchanged, China’s economic development situation is improving, and the demand for gasoline, aviation kerosene and other oil products linked to residents’ travel is expected to increase super-seasonally in the later period, and crude oil supply and demand are expected to increase after the second quarter Significant improvement. Taken together, crude oil prices are still mainly range-bound in the near future, and the game between weak reality and strong expectations has intensified.
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