01 The mid-term election is approaching, and oil prices may continue to fall.
The Secretary-General of OPEC spoke this week that energy demand will increase significantly by 23%, from 285.7 million barrels of oil equivalent/day in 2021 to 351 million barrels of oil and gas equivalent/day in 2045; oil will maintain the largest share in the energy structure; in the long run Look, oil requires $12.1 trillion in investment, and if that investment isn’t met, there could be severe shortages and volatility.
There was a consensus to act now to prevent a crisis later, and OPEC+ unanimously decided to take a pre-emptive stance to help stabilize global oil markets.
The UAE Minister of Energy said that OPEC’s decision to cut production is correct and is based on supply and demand. The purpose of our decision is to stabilize oil prices, not to increase oil prices. Oil prices have remained stable after the OPEC+ decision. None of the decisions we make in OPEC have any political meaning. Decisions are always made unanimously and the final decision is unanimous. We reaffirm our confidence in OPEC+ by cutting production, which we believe is the right decision.
The Biden administration plans to sell off strategic petroleum reserves ahead of next month’s congressional midterm elections in an effort to drive down fuel prices, people familiar with the matter said on Monday.
President Joe Biden is expected to make the announcement this week as part of his response to the Russia-Ukraine war, a source said. This time the remaining 14 million barrels of oil previously announced by Biden will be sold. The Biden administration announced in March this year that it would implement an unprecedented 180 million barrels of oil storage from May to October.
Biden said last week that gas prices are too high. He will make more anti-inflation comments this week. Deputy Energy Secretary David Turk also said last week that the government could tap into the Strategic Petroleum Reserve (SPR) as needed to stabilize oil in the coming weeks and months.
02 The market stabilizes and PTA decline slows down
After returning from the National Day, the PTA market showed a good start on the first day, and then the market fell sharply. PTA’s main contract 2301 fell from 5,700 yuan to 5,350 yuan, a drop of up to 6.14%; however, the recent weather and epidemic have affected transportation and shipping, suppliers’ spot offers have risen cautiously, and the basis has rebounded. The current downstream polyester demand has not improved significantly. Just need to buy to follow up, the market trading situation is average.
Looking at crude oil: Oil prices will continue to be volatile in the short term as the market tries to maintain a balance between supply shortages and a potential economic slowdown. While recession fears prevail, ultimately oil prices face upward risks. UBS Group said on the 17th that it had adjusted its investment stance on overall commodities from “most preferred” to “neutral”, which means that investors should maintain existing positions rather than add new positions. At the same time, the preference for oil is maintained, including a positive stance on commodities and energy stocks. It is believed that supply-side challenges are likely to be more serious than the demand slowdown in the coming months, and oil prices are expected to rise in the coming months.
From the cost side: because the PTA unit is stable, the demand for PX is acceptable; from a supply perspective, four domestic PX units are still under maintenance, supporting market sentiment, but one unit of Shenghong Refining has a 2 million tons/year PX New equipment, Weilian Chemical’s second phase of 1 million tons/year new PX equipment are planned to be put into production, and the increase in supply may restrict the market. In addition, terminal polyester demand is average. Under the long-short stalemate, the PX market is mainly volatile and consolidated.
Judging from its own supply and demand situation: Fuhai Chuang’s equipment increases the load, and Yisheng New Materials’ equipment reduces the load. Overall, the current PTA operating rate is 75.32%, and the supply is looser than in the previous period. However, Weilian Chemical’s new 2.5 million-ton unit is scheduled to be put into operation, and the overall supply of PTA will increase significantly by then. Recently, the polyester operating rate has remained around 83%, and the terminal weaving operating rate has remained around 73%. However, new orders are still weak, polyester factories are still expected to accumulate inventory and maintain losses. There is a high probability of polyester production cuts in the later period, and PTA supply and demand expectations are weak.
Taken together: crude oil market fluctuations have provided certain support to PTA, but due to the expected commissioning of PTA’s own new equipment, supply and demand have gradually weakened. As the temperature gradually drops, the rigid demand support of silver ten still exists, and there is potential demand for periodic bargain hunting. In the short term, the decline of the PTA market will slow down, or it may gradually stabilize after the range drops.
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