During the Spring Festival, Brent crude oil rose by more than 4%, standing above 90 US dollars per barrel. External crude oil has achieved seven consecutive weeks of rise, and the rise in oil prices due to tight supply is still continuing.
“On the one hand, OPEC+ crude oil production fell short of expectations. Institutional survey data showed that OPEC crude oil production increased by 210,000 barrels per day in January from the previous month, Saudi Arabia increased production, Libyan and Iraqi production decreased, and the implementation rate of production cuts in January rose to 132%. Russia increased crude oil Production, but still does not meet the OPEC+ quota. Most OPEC+ idle production capacity is insufficient and supply increases are limited. Libya, Ecuador and Nigeria have all experienced partial supply interruptions, and crude oil production is limited. On the other hand, the U.S. Permian Petroleum Exporting Countries on Thursday and Friday The crude oil production areas in this century are affected by the winter storm surge, and production is expected to decline. Weather forecasts show that the impact of the storm surge will recede next week, and the damage to U.S. crude oil production will be short-term.” Liu Shunchang said.
The core logic that currently dominates crude oil trends still lies on the supply side. Except for a few countries such as Saudi Arabia and the United Arab Emirates, most OPEC+ countries have insufficient idle production capacity and US shale oil production has been damaged. “In the short term, the problem of insufficient idle production capacity of OEPC+ is difficult to solve. OPEC+’s later increase in crude oil production will still be difficult to reach the monthly quota limit of 400,000 barrels per day. Coupled with the interruption of crude oil production caused by OPEC’s internal geopolitics, the upward trend in oil prices continues. “Liu Shunchang said that if a large-scale conflict breaks out between Russia and Ukraine in the future, the supply side of crude oil will become even more tense, and oil prices will most likely accelerate their rise.
“The sustainability of the rise in oil prices will most likely be better maintained before OPEC+ adjusts its production reduction benchmark in May.” Zhang Zhengze, an analyst at Guohai Liangshi Futures, said that the current production increase efficiency of OPEC+ on the supply side is low, regardless of the subjective release of output by major powers. Willingness, or the ability of small countries to release objective and actual production capacity, have led to OPEC’s current low efficiency in increasing production. However, with the adjustment of production reduction benchmarks in May, a batch of production capacity may be released intensively, which may have a certain impact on the market.
It is worth mentioning that due to the strong external performance of crude oil during the Spring Festival holiday, analysts believe that domestic energy and chemical products may open higher on the first day after the holiday, and asphalt, fuel oil and LPG, which are closely related to the cost side of crude oil, may rise.
It is understood that on January 31, Saudi Aramco announced that the CP for February was $775/ton for propane, an increase of $35/ton from the previous month. “After the Spring Festival, LPG downstream companies are expected to replenish their inventories. Considering that domestic coal prices have begun to weaken before the holiday, it is not recommended to over-allocate coal chemical-related varieties. Varieties that are more closely related to crude oil can be over-allocated at an appropriate time. However, due to the Spring Festival, The holiday period is long, and energy chemical products may be more volatile after the holiday, so investors should pay attention to position control,” Zhang Zhengze said.
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