Last night, international oil prices fell sharply again. During U.S. stock market trading, U.S. oil fell nearly 6% at one point, falling below $85/barrel for the first time since January this year. Brent oil fell below $90 a barrel for the first time since February. As of morning’s close, international oil prices fell to an eight-month low. WTI October futures closed down 5.68% at $81.94 per barrel. Brent November futures closed down 5.20% at $88.00 per barrel.
The impact of OPEC+’s symbolic production cuts subsides, and international crude oil returns to weakness
After the impact of OPEC+’s symbolic production cuts was digested by the market, international oil prices returned to weakness due to demand concerns. Yesterday, in terms of internal trading, the crude oil sector collectively weakened following the cost side. Among them, the main 2210 contract of crude oil fell 3.38% to close at 684.1 yuan/barrel, the main 2301 contract of fuel oil fell 5.93%, and the main 2210 contract of low-sulfur fuel oil fell 4.23%. The main asphalt 2212 contract fell 2.61%.
“The main reason for the decline in international oil prices yesterday is still the market’s concerns about demand. Whether it is the upcoming interest rate hikes by the European Central Bank and the Federal Reserve, or Saudi Arabia’s sharp reduction in the official price premium for exports to Asia in October, it shows that the market is worried about consumption. Worries about crude oil demand after the peak season.” Dong Chao, senior analyst at Shenyin Wanguo Futures Energy and Chemical Industry, said.
Previously, at the joint ministerial meeting on September 5, OPEC+ decided to cut production by 100,000 barrels per day in October. OPEC+’s unexpected production reduction drove international oil prices to rise by 4%. However, this move was also considered by the market to be more symbolic than practical.
At the same time, Saudi Aramco raised the price of most oil sold to the United States in October and lowered the price of all oil sold to Europe that month. Russia’s energy minister said placing a price cap on the country’s oil imports would lead to more Russian oil being shipped to Asia.
Dong Chao said that OPEC’s resolution on production reduction is of great significance. First of all, this is the first OPEC production reduction in a long time, showing that OPEC’s production policy is no longer a unilateral increase. Secondly, before this meeting, major countries such as Saudi Arabia, Iraq, and the United Arab Emirates all expressed their hope to reduce production, indicating that the mass base for this production reduction is strong. In addition, this is also a statement to the United States. The results of Biden’s visit to Saudi Arabia on July 15 will be limited to a one-time 3 million barrels of crude oil. As an alliance of oil-producing countries, OPEC will still focus on the interests of oil-producing countries. Finally, in the statement after the meeting, OPEC also gave an introduction to the future response. That is, if the United States and Iran reach an agreement in the later stage, OPEC will quickly increase production in response.
“As for the impact on oil prices, it is difficult for a single 100,000 barrels per day to drive crude oil prices up in the current demand environment, but this meeting expressed an attitude that oil-producing countries will not accept crude oil prices below US$90 per barrel. Nor does it accept political pressure from the United States. This will have a more obvious underpinning effect on oil prices,” Dong Chao said.
According to Yang An, head of the Energy and Chemical R&D Center of Haitong Futures, the weakening oil prices are not only due to the risk appetite of the commodity market cooling down again, but also a follow-up reaction to OPEC’s production cuts. OPEC decided to reduce production by 100,000 barrels per day in October at its monthly meeting. , although this sends a very strong signal to the market, oil exporting countries are unwilling to let oil prices fall further, and the market also believes that OPEC has such ability to protect the market. However, such a symbolic production cut cannot change the weak performance of oil prices. It is difficult for investors to give optimistic expectations for oil prices. OPEC needs to make more efforts to change the current weak situation.
It is understood that OPEC emphasized after the meeting that if fluctuations persist, OPEC’s leading country Saudi Arabia can hold a special meeting at any time. Saudi Energy Minister Abdul Aziz said, “This decision expresses our intention that we will use all tools. This move also demonstrates that we will remain focused and focused on supporting the stability and efficient functioning of the market.” Pre-emptive and proactive.” Yang An said that this move shows that oil-exporting countries will not tolerate the continued collapse of oil prices, which will make investors trying to short-sell be wary.
“However, OPEC production management has changed from the previous slow increase in production to maintain tight supply and strong oil prices to the need to reduce production to maintain the situation. This adjustment in expected management also means that the crude oil market pattern has changed from strong to weak.” Yang An explain.
In addition, Yang An said that the recent overall positive U.S. economic data has continued to strengthen the Federal Reserve’s hawkish expectations of aggressive interest rate hikes. The U.S. dollar has strengthened sharply, and risky assets such as commodities and stock markets have come under pressure, while the European economy is trapped by the energy crisis and continued rising highs. Inflation is facing recessionary pressure, and such economic performance is negative for the crude oil market. This is why OPEC has to step forward to protect oil prices.
“The market currently generally expects that the Federal Reserve will raise interest rates by 75 basis points at its September meeting. For the current oil price, weak macro expectations have been factored into the price. However, as expectations are realized or more radical interest rate hikes occur in the later period, oil prices may It will fall further,” Dong Chao said.
The polyester sector turned from rising to falling
As international oil prices fell back from highs, the chemical sector was all green, with PTA leading the decline. After a two-day correction, it gave up most of its gains at the beginning of the week. The main 2301 contract closed at 5,492 yuan/ton with a 3.34% drop. The main contracts of ethylene glycol and short fiber fell 0.32% and 2.69% respectively.
“PTA’s sharp decline was mainly due to the decline in crude oil and the slight weakening of the basis. The US Deputy Treasury Secretary set a ‘guidance’ price ceiling for Russian oil of US$44/barrel. Crude oil fell below the level, driving the energy sector to fall collectively. Fundamentals , early PTMainstream suppliers A have increased their load reduction due to shortage of raw materials, and the basis has strengthened significantly. The spot processing difference has exceeded 1,000 yuan. This week, with the restart of Fujia PX device, the load of mainstream suppliers has rebounded, and the tight pattern of PTA has eased. The basis The price of PTA weakened and profits were slightly compressed. As a result, the price of PTA fluctuated and fell, leading the decline in chemical products. “Tianfeng Futures analyst Liu Siqi said.
The reporter learned that the current PTA basis is at a historically high level. In this regard, Liu Siqi said that the raw material PX is tight, the supply side is affected by concentrated production cuts, the supply of tradable spot is tight, and suppliers have market repurchase behavior, so the overall basis remains strong. . “Liu Siqi said that aromatic products have been affected by the increase in demand for oil blending in North America/Asia this year. The export of Asian PX to the United States has increased, and the overall supply of PX has dropped significantly. PTA factories have been passively reduced and shut down due to the shortage of raw materials, and domestic destocking has been obvious from August to September. PTA spot prices are tight, and basis spreads are at historically high levels.
According to Cheng Xuefei, an analyst at Founder mid-term futures PTA, the high basis of PTA is mainly due to the differentiation between the futures and spot markets caused by strong reality and weak expectations. The fundamentals of supply and demand of PTA have always maintained a tight balance, and social inventories have continued to decrease. ation, PTA upstream PX supply and demand has always been in a continuous destocking situation. Superimposed on the impact of some large PTA factories suspending production and reducing load, the spot market price is relatively strong, while the futures market is driven by the negative macro monetary policy. Under the expectation of economic recession, the price in the future Monthly contract prices continued to be suppressed. The current Back structure means that the market is still in a game between strong reality and weak expectations.
In fact, the polyester sector saw a collective surge at the beginning of the week, which seemed to be an improvement in market sentiment. So will this year’s “Golden Nine and Silver Ten” come as scheduled?
“The collective surge in the polyester industry chain at the beginning of this week is the result of the joint action of upstream and downstream. Entering the ‘Golden Nine and Silver Ten’, under the tight upstream supply side, raw material prices are expected to be firm. After the end of downstream power restrictions, orders have increased seasonally, and rigid demand and The increase in speculative stocking has driven up the price of polyester chain products,” Liu Siqi said.
From the perspective of demand, Liu Siqi said that the performance of polyester production and sales from the end of August to the beginning of September was favorable, and some speculative demand was released in the downstream under the mentality of “buying up but not buying down”. Orders have improved slightly seasonally on a month-on-month basis, but are still skewed year-on-year. At present, the inventory of finished products at the end of the industrial chain is relatively high. A slight improvement in orders may ease the inventory pressure, but it is still difficult for prices to continue to rise.
In Cheng Xuefei’s view, the recent collective surge in the polyester market is just a slight improvement in market mentality. Whether the market mentality is reversed still needs to be continuously observed. “The entire polyester market generally has low expectations for the ‘Golden Nine and Silver Ten’. The market expects that it may lead to a slight marginal recovery of the polyester industry, but it will be difficult to return to historical seasonal levels. The marginal improvement on the demand side may slightly boost PTA price, but the impact is expected to be limited,” Cheng Xuefei said.
For ethylene glycol, which has relatively weak fundamentals, Feng Xiaofen, an ethylene glycol analyst at Founder Mid-Term Futures, believes that the rally at the beginning of the week is mainly due to two factors: First, affected by the typhoon, some shipping schedules were postponed , leading to a sharp decline in ethylene glycol port inventory, which provides strong support for ethylene glycol; second, as the peak season of the year gradually enters, demand gradually improves. In addition to rigid purchases, some terminal factories also have a slight increase in speculative demand, and they purchase at bargain prices to stock up. , boosting the production and sales of polyester, and the high level of polyester inventory has been significantly reduced, which to a certain extent has boosted the willingness of polyester factories to increase their liabilities.
“Although demand is expected to improve during the peak season this year compared with the current situation, due to the recurrence of domestic and foreign epidemics and the complex and ever-changing international environment, it is expected that this year’s peak season will not be the same as in previous years. In the future, we need to pay attention to the continued follow-up of terminal orders. If the order is followed up If it is insufficient, the upside space may be limited.” Feng Xiaofen said.
According to Founder mid-term futures short fiber analyst Yu Yangfeng, according to past practice, the traditional peak season of “Golden Nine and Silver Ten” is that demand begins to improve in August and lasts until November. This year’s demand is obviously lower than in the past, and terminal orders only increased in September. Improved. Demand in Europe and the United States has weakened. Weaving orders in Southeast Asia in the second half of the year are significantly weaker than in the first half of the year. It is difficult for my country’s overseas orders to see a significant improvement. Domestic demand is expected to be limited due to the impact of the epidemic and the economy. Therefore, the industry generally expects that the peak season will not be prosperous. “For short fiber, the degree of production losses is deepening, companies may reduce burdens and increase prices, and production profits are expected to recover. However, the improvement of terminal orders is limited, and the inventory of terminal pieces and downstream pure polyester finished products is high, which will suppress short fiber Price.” Yu Yangfeng said.
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