Last Friday, affected by the unexpected CPI data in the United States, financial markets experienced violent oscillations, and international oil prices also fell in response. Currently, macro factors have an increasing impact on oil prices. Although the short-term rapid decline in oil prices once caused the market to exclaim, the final monthly spread structure of crude oil has not weakened, indicating that the strong pattern of oil prices is difficult to loosen.
As the main Brent contract reached a high of close to US$125/barrel, setting a new three-month high, this means that the market will once again face the huge pressure brought by high oil prices on the economy. Major authoritative institutions have The global economic target forecast for this year has been lowered. On Friday evening, the United States announced that the annual rate of CPI, which was not seasonally adjusted, in May was 8.6%, the highest since December 1981. The annual rate of U.S. CPI, which was not seasonally adjusted, was 8.6% in May, the highest since December 1981, as gasoline prices hit record highs. , and service costs have further risen, and the high prices of gasoline and food have brought painful feelings to the people. The higher-than-expected CPI data once again strengthened the market’s expectations for the Fed’s hawkishness. Risk assets such as stock markets and commodities fell one after another after hearing the news. The strong crude oil also fell from the day’s high, catching many optimistic investors off guard. .
While oil prices have pushed up inflation, they will also gradually have a negative impact on the supply and demand of the crude oil market. However, this rise in oil prices is something that crude oil consuming countries do not want to see. As time went by, everyone realized that although Western countries imposed severe sanctions on Russian oil, the vitality of Russian oil exceeded expectations. Russia’s external supply did not decrease as much as the market expected in March and April. At the same time, crude oil consuming countries led by the United States It is also implementing the largest strategic crude oil launch in history to increase supply, and it is expected that this action will cool down oil prices. More and more information is sending a signal to the market: the oil market supply is still tight, which has become a very thorny issue at the onset of the peak consumption season in the northern hemisphere. U.S. Treasury Secretary Yellen lamented, “Unless we see some breakthrough that brings a lot of crude oil back to the market, energy prices will be higher for the rest of the year, and gasoline prices are unlikely to fall back anytime soon.”
Frequent supply disruptions and low inventories keep oil prices strong
The U.S. Energy Information Administration (EIA) released its short-term energy outlook for June. In the report, the EIA reported a series of shocks from Russia’s full-scale invasion of Ukraine, based on the latest macroeconomic outlook, OPEC + production decisions, and the speed at which U.S. oil and gas producers increase drilling. A new balance analysis was conducted on the crude oil market from other perspectives. EIA believes that the core factor of uncertainty in energy supply is how sanctions affect Russian oil production. It is assumed that the European crude oil import ban will be implemented within six months and the petroleum product import ban will be implemented within eight months. This forecast does not reflect restrictions on transportation insurance, and these or other potential future sanctions could reduce Russian oil production more than expected, creating an upside risk to crude oil prices over the forecast period. Based on this EIA deduction, it is believed that Russia’s total liquid fuel production will drop from 11.3 million barrels per day in the first quarter of 2022 (first quarter of 2022) to 9.3 million barrels per day in the fourth quarter of 2023. However, EIA is in the outlook Revised its forecast for Russian crude oil production in 2022, up sharply by 380,000 barrels per day from last month, and assumes that about 80% of the crude subject to the EU import ban will find alternative buyers, mainly in Asia and obviously U.S. Energy The Agency realizes that sanctions will not cause Russian oil to lose that much. In the words of the Russian Prime Minister: Russian crude oil will not have no export market because it is very competitive. Russian official data shows that the average export price of Ural crude oil in April and May was 73.24 USD/barrel, which is 32% lower than the international oil price and has extremely high price competitiveness. However, after OPEC+ raised its production quota for June, EIA also raised last year’s crude oil supply accordingly, and believes that global crude oil inventories will accumulate 440,000 barrels per day in 2022, judging from the third quarter of 2020 to the third quarter of 2022. After seven consecutive quarters of global oil inventory reductions in the first quarter, OECD oil inventories will resume increasing, but inventories will remain below their five-year average until the fourth quarter of 2023. Although the crude oil market has begun to accumulate storage, the current oil inventory level is very low and is not enough to suppress prices. Moreover, low inventory magnifies the possibility of oil price fluctuations, which will make investors pay close attention to the possibility of supply instability caused by some geographical factors. The risk of rising oil prices.
In fact, there is another more critical driving force for this round of rising oil prices that started in late May, and that is the hot refined oil market in Europe and the United States. Although the crude oil market supply is relatively tight and inventory is low, fortunately, OPEC has increased production. Some cooling measures, such as the release of strategic reserves and the release of strategic reserves, can alleviate market anxiety. However, the supply of refined oil products in the European and American markets has become a huge challenge. In recent years, due to the impact of the epidemic and the impact of the energy transformation strategy, according to statistics from relevant institutions, after the epidemic, the world has about 3 million barrels/day of refining capacity has withdrawn from the market, and the exiting capacity is concentrated in Europe and the United States. According to EIA data, the operational capacity of U.S. refineries in 2021 is slightly more than 18 million barrels/day, the lowest level since 2015, and In the energy transition�’s stagflation. Late last month, the Institute of International Finance lowered its forecast for global gross domestic product (GDP) growth this year from 4.6% to 2.3%. Among them, as the euro zone is greatly affected by the conflict between Russia and Ukraine, the Institute of International Finance’s forecast for its economic growth this year has been reduced from 3% to 1%. On the basis of the latest forecasts, the Institute of International Finance believes that the risk of a global economic recession is rising.
Recently, the market has once again reached an unprecedented consensus on the tight supply in the oil market. Many investment banks have been bullish on oil prices. Oil-exporting countries represented by the United Arab Emirates have also stood up and repeatedly emphasized the tight supply. Market anxiety has further increased. Therefore, the oil price last Friday night It suffered a sharp drop in the short term but eventually recovered nearly half of the loss, and its forward curve structure clearly shows that the crude oil market is tight in supply. However, we still have to see that the economic pressure at the macro level remains unabated. In the face of huge inflationary pressure, the United States may continue to introduce hawkish measures beyond expectations. This means that high oil prices face the risk of significant fluctuations, and investors are maintaining a bullish mindset. Pay attention to risk control when doing so.
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