Yesterday afternoon, a piece of news triggered another panic in global financial markets: the Financial Times reported that Moderna’s CEO expected that the existing vaccine would be far less effective in dealing with Omicron than in dealing with early new coronavirus strains.
Yesterday afternoon, crude oil futures led the decline in the domestic futures market at the close. The main low-sulfur fuel oil contract fell by more than 7%, the main liquefied petroleum gas contract fell by more than 6%, and the main fuel oil and SC crude oil contracts fell by more than 5%. During the night session, crude oil varieties still led the decline. Fuel oil and liquefied petroleum gas fell by more than 3%, while cotton, soybean oil, and low-sulfur fuel oil fell by more than 2%.
Subsequently, international oil prices also “dived” simultaneously. During the U.S. stock market, U.S. WTI crude oil fell below $64.5/barrel, down about 7.9% on the day, and Brent crude oil fell below $67.5/barrel, down more than 8.1% on the day. European stocks fell sharply at the opening, with the French CAC 40 index falling 1.43%, the British FTSE 100 index falling nearly 1%, and the European Stoxx 50 index falling 1.15%.
Market panic returns, crude oil plummets again
International oil prices continue to fall. Even though the specific impact of the South African mutant strain Omicron on crude oil demand cannot yet be determined, it is clear that the mutant strain is still the trigger for the recent collapse of the crude oil market.
“This round of crude oil decline is actually divided into two stages. The first stage is due to the emergence of the South African mutated virus, as well as the large-scale release of crude oil reserves by the United States and other countries, and it coincides with the Thanksgiving holiday in the United States. It caused a panic-like decline in the market and once reached a low in nearly three months. This was a concentrated correction in response to the negative short-term news and the excessive gains in the early period. In the early days, crude oil led the rise of the entire commodity and drove inflation in the United States. It continues to intensify. Although the rise in crude oil prices does not have a large impact on the overall inflation in the United States, the market has focused its attention on this and it has become the target of public criticism.” said Yu Pengsen, energy researcher at Zhaojin Futures.
Then there was a short-term rebound adjustment in the crude oil market in the second stage. He said that first of all, crude oil has undergone some repairs. Some market participants believe that crude oil has fallen in a panic and has a certain bargaining value. Then, short sellers have closed their positions and left the market after concentrated suppression, and there was a 6% rebound in the session. However, at noon on Tuesday, the CEO of the vaccine production company Moderna expressed concerns about the current South African variant virus and was unable to predict the future impact. However, this was mainly because there was no data to support it. The market’s interpretation of this news, combined with News about the reduced effectiveness of vaccine companies such as Pfizer caused a second panic in the market, and oil prices fell sharply again.
According to Yang An, head of energy and chemical R&D at Haitong Futures, it is obviously one-sided to attribute the plunge in oil prices only to the South African mutant strain. The core factor behind the weakening of oil prices is the deterioration of the supply and demand situation in the oil market due to early changes in supply and demand. is the fundamental reason.
“In particular, the impact of the 60 million barrels of strategic crude oil released by the United States and other countries this time is of great significance. This will cause the crude oil market to once again experience a surplus in the next few months. Moreover, the epidemic in Europe has been very serious before this and has dragged down demand. , so even without the mutant strain as a trigger, it can be predicted that oil prices will be under tremendous pressure in the coming time.” Yang An said.
In fact, there is currently insufficient data to demonstrate the ultimate impact of the mutant strain on the economy and crude oil demand, and it may take several weeks to determine. Judging from the efforts of all parties since the epidemic, the center of gravity of oil prices has successfully risen from the previous low to the high in recent years. Yang An believes that taking into account the efforts of OPEC+ and the global macro situation, it is expected that the oil price will most likely be around US$60/ A new balance is formed around the barrel. This price area is a relatively acceptable price for both oil-producing and consuming countries, but in the end it still depends on the implementation of factors affecting the crude oil market. The subsequent output policy of OPEC+, when Iran will return to the market, the progress of U.S. shale oil production increase and changes in the epidemic are all core factors affecting oil prices. Whether the global economy can maintain recovery is also critical to the future of oil prices.
Yu Pengsen believes that this round of international crude oil market is not over yet, but it is still unknown whether it will continue to fall or rebound in the future. The market needs clear direction guidance from this week’s OPEC meeting.
“This panic-like decline in crude oil has not changed the real supply and demand situation in the market. Global crude oil inventories are still declining. There is currently no data showing that supply exceeds demand in the crude oil market. OPEC has always refused to significantly increase crude oil production. The main reason is the epidemic and the uncertainty of demand. At present, OPEC’s concerns are correct, but the market and the United States can no longer wait until the supply of crude oil exceeds demand next year to cause the price of crude oil to decline. But after the panic, the market , we must return to the real supply and demand situation, and the game between reality and expectations will continue.” Yu Pengsen said that from a fundamental point of view, December is a critical month, OPEC’s production increase has been lower than expected, and oil prices have fallen sharply. , may disrupt OPEC’s established steps and delay the increase in production.��Other situations arise to disturb crude oil market prices. For now, crude oil prices are still likely to oscillate in a wide range and are still unstable. It is an established fact that the price center will move downwards, but it is still unknown at what price a new round of competition will start, because the OPEC meeting has not yet When the meeting was held, the market was still confused.
Currently, high inflation is putting pressure on many countries such as the United States. The continuously rising inflation situation around the world is mainly caused by central banks of various countries releasing more water than expected in the early stage. “Whether it is from an economic or political perspective, the Biden administration in the United States urgently needs to control inflation, and for Biden, controlling energy prices is a top priority, so this time the United States teamed up with multiple countries to release strategic oil actions, and U.S. State Department Senior Advisor Amos Hochstein told CNBC that the government is ready to release more crude oil when necessary. This shows that the United States is very determined to control oil prices.” Yang An said.
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