Introduction:
Data released by the U.S. Energy Information Administration (EIA) on Wednesday showed that U.S. commercial crude oil inventories fell by 4.715 million barrels to 423.6 million barrels in the week ended December 17; U.S. Strategic Petroleum Reserve (SPR) inventories fell to 596.4 million barrels, The lowest level since November 2002. After the EIA inventory data was released, international oil prices rose slightly.
Just now, news came out from the market that South Korea will release 3.17 million barrels of oil reserves from January to March next year.
Data released by the U.S. Energy Information Administration (EIA) on Wednesday showed that U.S. commercial crude oil inventories fell by 4.715 million barrels to 423.6 million barrels in the week ended December 17, which is expected to decrease by 2.3 million barrels and the previous value decreased by 4.584 million barrels; U.S. gasoline Inventories increased by 5.533 million barrels, which is expected to increase by 650,000 barrels, and the previous value decreased by 719,000 barrels; U.S. refined oil inventories increased by 396,000 barrels, and were expected to decrease by 250,000 barrels, and the previous value decreased by 2.852 million barrels; U.S. Strategic Petroleum Reserve (SPR) inventories fell to 596.4 million barrels, the lowest level since November 2002.
Affected by EIA inventory data and other factors, international oil prices rose collectively on Wednesday. The February 2022 U.S. oil contract rose 2.69% to US$73.03/barrel; the Brent oil March 2022 contract rose 2.24% to US$75.64/barrel. Domestic crude oil closed on Wednesday afternoon, with the main contract rising 4.18%, and continued to rise during the night trading session, closing up 1.9%.
Zheng Mengqi, an energy researcher at Hizheng Futures, believes that the current crude oil market is intertwined with long and short positions. The positives are mainly reflected in the news, while the negatives are mainly reflected in the weakening fundamentals.
An Jing, senior energy and chemical researcher at China Merchants Futures, believes that the rebound in oil prices in the past two days is mainly due to two reasons: On the one hand, Libya’s largest oil field Sharara was closed on Monday, resulting in a drop in output of 300,000 barrels per day, mainly due to the internal conflict before the Libyan presidential election. lead to. Libya’s output in November was 1.2 million barrels per day. If internal conflicts intensify, output may return to zero in the most extreme case. This is the biggest potential benefit for oil prices in the near future and needs to be focused on.
On the other hand, oil prices rose in Tuesday night trading as European natural gas surged 20%. The surge in natural gas is mainly due to the fact that while the French nuclear power plant was undergoing maintenance, the flow of the Yamal natural gas pipeline from Russia to northwest Europe was changed to the reverse direction to Poland. European power stations had to use fuel-fired power generation as an alternative, resulting in a certain increase in demand for oil products. If a cold wave occurs in Europe, there may be room for further price increases for natural gas, and there may also be room for growth in demand for fuel-fired power generation. However, due to capacity bottlenecks, fuel-fired power generation may only have room for hundreds of thousands of barrels per day at most.
Regarding the gradual weakening of crude oil fundamentals, Zheng Mengqi believes that although there is news that the symptoms of the Omicron mutant strain are mild, its contagiousness is no less than that of the Delta strain, and concerns about declining crude oil demand still exist. “The UK will not restrict travel before Christmas, and there is no more data to evaluate the substantial harm of the Omicron variant strain. The uncertainty is large. If the prevention and control efforts are not good, it cannot be ruled out that after Christmas There is a possibility of a significant increase in new confirmed cases. In addition, the Federal Reserve’s monetary policy will gradually tighten, and the U.S. dollar index remains relatively high, putting pressure on oil prices.”
Zheng Mengqi said that judging from the energy crisis that was hyped in October, the substitution effect of crude oil is relatively limited, and an upward breakthrough needs to be driven by other substantial benefits. From a fundamental perspective, the crude oil market will still be in tight balance between supply and demand in January next year, and crude oil inventories will show an overall seasonal decline. In February next year, if OPEC+ continues to maintain an increase in production of 400,000 barrels per day, the crude oil market will experience excess supply and demand. Coupled with the spring maintenance period of U.S. refineries, crude oil storage will gradually accumulate. Considering that the Christmas holiday is approaching and market liquidity has declined, crude oil price fluctuations may be amplified. Overall, the current crude oil price has limited space above it, but there is also some support below due to low inventories, and it is mainly operating in oscillations.
In terms of operation, An Jing suggested to focus on short selling and counter arbitrage on rallies. Risk points include the sharp decline in production caused by the civil war in Libya, the explosion of fuel demand due to extremely cold weather this winter, OPEC+ reducing the increase or even cutting production, and the advent of specific COVID-19 drugs.
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