The United States announced the release of crude oil reserves, and the Ministry of Foreign Affairs responded yesterday.
On November 24, Foreign Ministry spokesperson Zhao Lijian stated that as one of the world’s major oil producers and consumers, China has long attached great importance to the stability of the international oil market and is willing to maintain communication with all relevant parties on maintaining market balance and long-term stability, and strengthen Cooperate to meet challenges together. At the same time, China has long been committed to ensuring the security of its own energy supply and has established an independent and complete national oil reserve system. China will arrange for the release of national crude oil reserves based on its own actual conditions and needs, take other necessary measures to maintain market stability, and publish relevant information in a timely manner.
Zhao Lijian pointed out that China has noticed that major consumer countries have recently taken actions to release reserves in response to market fluctuations and changes. China is maintaining close communication with relevant parties, including oil consuming and producing countries, on this issue and hopes to ensure the long-term smooth operation of the oil market through communication and collaboration.
Yesterday, the Wall Street Journal reported that Saudi Arabia and Russia are considering changing OPEC+ oil production policies as retaliation for the release of strategic crude oil reserves by the United States, a joint oil consumer. Otherwise, OPEC+ originally planned to increase production by 400,000 barrels per day every month until the alliance’s oil production returns to pre-epidemic levels next year, reversing the unprecedented and huge production cuts after the epidemic.
It is reported that Saudi Arabia believes that the release of strategic crude oil reserves by many countries may increase global supply and thereby lower oil prices. In order to balance this short-term unexpected supply and demand imbalance, the country may recommend that OPEC+ suspend production increases. However, the United Arab Emirates and Kuwait, which have had oil production policy differences with Saudi Arabia over the past year, do not agree to suspend production increases. The United Arab Emirates also said at the beginning of this week that OPEC+ did not need to adjust its production plan, let alone increase production excessively.
Domestic and foreign crude oil varieties are rising
On Wednesday, domestic crude oil futures rose together with two fuel oils. As of the close, the main 2201 contract of crude oil futures rose 4.52% to close at 513.4 yuan/ton, a new one-week high; the main 2201 contract of fuel oil futures rose sharply by 4.82% to close at 2,891 yuan/ton; the main low-sulfur fuel oil futures The 2202 contract rose 5.08% to close at 3768 yuan/ton.
International crude oil futures ended two consecutive days of gains. U.S. WTI January crude oil futures closed down 0.14% at $78.39/barrel; Brent January crude oil futures closed down 0.07% at $82.25/barrel.
Regarding yesterday’s sharp rise in domestic crude oil futures prices, Zheng Mengqi, a researcher at Hizheng Futures, said that this was mainly because the release of strategic oil reserves was less than expected and all the bad news was exhausted.
The United States previously requested that OPEC+ increase production in December from 400,000 barrels/day to 600,000-800,000 barrels/day, but OPEC+ ignored the U.S. request. Subsequently, the Biden administration repeatedly stated that it would release strategic oil reserves, and oil prices Oscillation downward. However, the amount of strategic oil reserves released by the United States in collaboration with India, Japan, South Korea, and the United Kingdom was less than expected. Although the United States released 50 million barrels of strategic oil reserves, it only had a major impact on the current market of 18 million barrels, and the remaining 32 million barrels. Buckets will be released in the coming months and will be replenished over the next 3 years after release. The strategic oil reserves released by India and the United Kingdom only amount to one day’s consumption, and the strategic oil reserves released by Japan only amount to 1.5 days’ consumption, accounting for a small proportion of its strategic oil reserves.
“Several major consuming countries jointly sold out their reserves to eliminate all the negative effects, and oil prices stopped falling and rebounded. Driven by the cost side, the prices of fuel oil and low-sulfur fuel oil also rebounded.” Zheng Mengqi told reporters.
Huang Zhen, a senior researcher on major assets in New Century Futures, pointed out that OPEC’s attitude is very tough and it is expected that it will make corresponding adjustments to its production increase plan at its December meeting, which will return global crude oil supply to a tight balance. In addition, with the German Energy Agency suspending the approval of the Nord Stream 2 pipeline, the European energy crisis still exists, and the reverse substitution of oil for natural gas will continue to grow significantly. “The resonance of multiple factors caused a sharp rebound in oil prices yesterday.”
Looking forward to the market outlook, Zheng Mengqi believes that the United States wants to jointly sell reserves to pressure OPEC+ to increase production, but OPEC+ has not made a clear position on this, and OPEC proposed in its monthly report that crude oil demand will weaken in the first quarter of next year, and a significant increase in production will lead to a decline in oil prices. , is not in the interest of OPEC+ member states, therefore, it is not ruled out that OPEC+ will give up the production increase of 400,000 barrels per day from January to February next year. In addition, Goldman Sachs, Barclays and other institutions continue to be bullish on crude oil, and bulls’ confidence has increased.
“In the short term, the reserve sales are small and have not changed the current tight balance between supply and demand; in the medium term, we still need to pay attention to whether OPEC+ adjusts the current production reduction policy.” Zheng Mengqi said that although the current reserve sales have been priced in, the potential negative effects Risks still cannot be ignored. The Federal Reserve has reduced its bond purchases, there are strong expectations for an early interest rate hike, and the epidemic in Europe has worsened again. The crude oil market will still be dominated by oscillations in the future.
Huang Zhen said that although OPEC+ refused to increase production and said that the global oil market would turn into a state of surplus, the United States asked Asian allies to release oil reserves, and global oil demand was recovering.Affected by factors such as the epidemic slowdown, market expectations have reversed. However, OPEC+ insists on slowly increasing production, U.S. oil production is far from returning to pre-epidemic levels, China’s demand remains stable, and Germany’s suspension of the Nord Stream 2 pipeline review process has led to reverse substitution of oil. With demand increasing, it is too early to conclude that the global oil market is oversupplied. Although oil prices have fallen in the short term, he continues to be optimistic about medium and long-term oil prices.
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