As the war situation changes, the global market oscillates. Affected by the situation in Russia and Ukraine, the market’s risk aversion sentiment has increased, driving the rise in commodities and safe-haven assets such as oil, natural gas, gold, and silver.
On February 24, international oil prices exceeded the US$100/barrel mark. WTI crude oil futures prices rose by more than 9% during the day, and Brent crude oil futures prices rose by more than 7%. Then the increase narrowed. At the close of the day, WTI April crude oil futures prices rose by more than 7%. Prices rose 0.77%, with Brent April crude oil futures rising 2.31%. At the same time, the price of natural gas futures linked to the European natural gas wholesale price TTF once soared 50% to 126 euros/MWh. Natural gas prices in Europe are now well above the €16/MWh a year ago.
On February 25, oil prices closed down, with weekly highs and sharp fluctuations. After the war broke out on the 24th, Brent oil and US oil successively reached the integer mark of US$100/barrel. Last Friday, the May contract of Brent crude oil closed at US$94.56/barrel, an increase of 1%; the April contract of WTI crude oil closed at US$91.94/barrel, an increase of 1.6%.
Since the Russia-Ukraine war broke out on February 24, the situation has been changing rapidly. From the perspective of Russia’s entire military operations in Ukraine, it is divided into missile warfare, ground warfare, network warfare, port warfare, etc. Russia first launched a high-precision attack on military bases in Ukraine. Ground troops outflanked Ukraine from eastern Ukraine, northern Ukraine, Crimea, and Belarus. The port city of Odessa was attacked by missiles. Last weekend, Ukraine’s capital, Kiev, and its third largest city were attacked. After the attack, the originally planned negotiations between Russia and Ukraine failed to take place. The tug-of-war and the non-short-term nature of the war aroused great concern in the market.
Zhong Meiyan, director of energy and chemicals at Everbright Futures, believes that on February 26, the United States, the European Union, the United Kingdom and Canada issued a joint statement announcing a ban on several major Russian banks using the SWIFT international settlement system, which will ensure that these banks are separated from the international financial system. and impairing its ability to operate globally. In the financial war, SWIFT is also a big killer – the “financial nuclear button”. It is expected that the prices of energy products, mainly crude oil, will still experience severe fluctuations on Monday, which means that there are concerns that Russia’s international energy trade will suffer during settlement. It is a huge inconvenience. The Russian government’s borrowing costs are rising and its cash needs are surging. Russia’s energy exports and international trade will also be further hindered.
In terms of fundamental data, data released by the EIA showed that in the week as of February 18, commercial crude oil inventories in the United States excluding strategic reserves unexpectedly increased significantly, and refined oil inventories and gasoline inventories were basically in line with expectations. EIA crude oil inventory changes during the week actually increased by 4.514 million barrels, which was expected to decrease by 1 million barrels, and the previous value increased by 1.121 million barrels. In addition, EIA gasoline inventories actually reported a decrease of 582,000 barrels that week, compared with an expected decrease of 1.5 million barrels. Refined oil inventories actually reported a decrease of 584,000 barrels, compared with an expected decrease of 1.7 million barrels. The U.S. Strategic Petroleum Reserve (SPR) inventory decreased by 2.444 million barrels last week to 582.4 million barrels, a decrease of 0.42%.
Historically, oil prices exceeded US$100/barrel twice in 2008 and 2011, and then reached highs of US$147/barrel and US$128/barrel respectively. Especially in 2011, the oil price was affected by geopolitical factors. It has maintained a high level of 90-130 US dollars per barrel and continued to oscillate for a year. “At present, the conflict between Russia and Ukraine is unlikely to be alleviated in the short term. As this incident continues to unfold, the risk factors for oil prices have not been eliminated, and the risk premium will continue to increase. Although the high amplitude will intensify, the overall situation will still remain relatively high. Strong momentum. It is worth noting that once a geopolitical war occurs, the impact on commodity prices will be uncontrollable. It is necessary to pay attention to changes in news, emotions, financial sanctions and other dimensions at any time. The high amplitude of oil prices will intensify, and investors need to Be aware of the risks,” Zhong Meiyan said.
The volatile situation in Russia and Ukraine has amplified the fluctuations in high oil prices. However, looking at the future price fluctuations of the olefin sector, it is obvious that it cannot keep up with the rise and fall of oil prices. The main reason is still the lack of follow-up on the demand side. Polyolefin is a relatively terminal chemical product on the market, while methanol is a coal product. The price transmission impact of the rise and fall of crude oil is relatively indirect. The olefin sector is at the end of the chemical product sequence that follows crude oil. The impact of geopolitical premium on energy and chemical products through crude oil has been mostly digested by the market, while the country is in the upstream and downstream game stage. In terms of polyolefins, the market focuses on whether upstream destocking is accelerating and the recovery of downstream demand. In terms of methanol, as the National Development and Reform Commission issued the “Notice on Further Improving the Coal Market Price Formation Mechanism” on February 25, the decline in thermal coal on that day dragged down the trend of methanol, and the market focus once returned from crude oil to coal. “For the olefin sector, coal is mostly a short-term emotional disturbance, and its response to oil prices is gradually blunted. High oil prices still bring support on the cost side, and the space below methanol and polyolefins is small, but the supply and demand pattern and oil price trends are Changes are intertwined, and it is necessary to grasp the rhythm of switching between cost-side drivers and supply and demand logic. As March approaches, spring inspection plans will be announced one after another, but expectations for ‘gold, three, silver and four’ should not be too early, as the policy impact will lead to limited downstream demand. ” said Yang Yijing, an olefins researcher at Hengli Futures Research Institute.
Regarding polyester, Zhou Yun of Hengli Futures Research Institute believes that the situation between Russia and Ukraine has entered the stage of fighting and negotiating, and the excitement of international oil prices has subsided. Against this background, the price of polyester raw materials, as a downstream commodity of crude oil, is also under pressure. The main performance Weakened support for costs. Currently inThere is a window of demand for esters, so PTA and ethylene glycol will suffer a short-term double negative. But the market does not need to be overly pessimistic. There are two reasons: first, the seasonal pattern of “gold, three, silver and four” in polyester terminal demand is obvious. Although it has not started yet, it is still worth looking forward to; second, whether it is PTA or E-2 Alcohol (youtou) production plants are all in a state of loss, and there is a small chance that prices will continue to drop significantly. Therefore, the core contradiction of polyester raw materials lies in the degree of recovery of terminal demand. The marginal impact of the situation in Russia and Ukraine on its prices has gradually decreased.
“From an energy and chemical perspective, geopolitical conflicts will be the dominant factor, with a wide range of impacts. Especially from the perspective of financial sanctions, the global dependence on Russian energy is evident, and energy and chemical prices will also fluctuate significantly following the high oil prices. .” Zhong Meiyan said.
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