EIA crude oil inventories climbed, and international oil prices fell sharply
Last night, the U.S. Energy Information Administration (EIA) released the latest inventory data. Data showed that crude oil inventories continued to rise last week, increasing by 1.002 million barrels, compared with an increase of 3.29 million barrels in the previous week. After the data was released, WTI crude oil futures fell 3.3%, the largest decline in the week. As of early morning closing this morning, WTI December crude oil futures closed down $2.81, or 3.34%, to $81.34 per barrel. Brent January crude oil futures closed down $2.14, or 2.52%, at $82.64 per barrel.
The White House did not announce the release of strategic petroleum reserves, but said it would continue to study all available tools to limit the impact of high oil prices on consumers.
In a letter this week, 11 Democratic senators urged Biden to act quickly to address the national average price of a gallon of gasoline, which has reached its highest level since 2014. They believe households and small businesses are currently bearing an “undue burden” and are urging the release of oil from the country’s strategic reserves or even more radical measures to ban U.S. crude oil exports.
It is worth noting that Cushing crude oil inventories continued to decline last week, although the magnitude became smaller, but they were close to operating lows and well below seasonal averages.
The center of gravity of global oil prices rose to a five-year high
Affected by the sharp rise in international oil prices, domestic oil prices on Wednesday Crude oil in the futures market generally opened higher. Among them, the main SC crude oil contract 2112 rose 2.22% to close at 538 yuan/barrel, the main low-sulfur fuel oil contract 2201 rose 2.49%, closing at 3949 yuan/ton, and the main asphalt contract 2112 rose in the afternoon. Accelerating, it rose 3.20% to close at 3032 yuan/ton.
“There are two main reasons for the sharp rise in international oil prices: First, the EIA released the “Short-Term Energy Outlook” on Tuesday, believing that OPEC’s continued production increase next year will exceed the growth rate of demand. The oil price next year is expected to be US$72/barrel, which is lower than the current oil price. Based on this report, the White House stated that it will not announce the release of strategic petroleum reserves. The original market expectation that the United States would release strategic petroleum reserves to suppress oil prices fell short. , oil prices have risen as a result. Second, the United States has lifted travel restrictions, demand for the slow recovery of the global economy will continue to increase, and the market believes that supply is still tight.” said Yu Pengsen, energy and chemical researcher at Zhaojin Futures.
Yang An, head of energy and chemical R&D at Haitong Futures, believes that the EIA’s increase in oil prices and demand in 2021 has significantly boosted oil prices, and the US White House’s stance has further stimulated the long investment in funds. enthusiasm. In addition, the unexpected drop in U.S. API crude oil inventories in the early morning also provided impetus for the upward movement of oil prices. Data show that in the week ending November 5, crude oil inventories unexpectedly dropped by 2.485 million barrels, gasoline inventories plummeted by 4.516 million barrels, refined oil fell by 3.257 million barrels, and Cushing crude oil inventories increased by 234,000 barrels.
“There is no doubt that the center of gravity of global oil prices has risen to the high level in five years. Based on the inflation expectations brought about by the current macro environment and the crude oil market’s new understanding of oil prices, the It is normal for the outlook for the future of oil prices to be revised higher than at the beginning of the year,” Yang An said.
Yu Pengsen believes that OPEC+’s insistence on continued and orderly production restrictions has caused oil prices to continue to rise. It has now risen to around US$85/barrel. Some investment banks and information institutions have already set the year-end forecast. The oil price forecast is adjusted to 90-100 US dollars per barrel. Even if supply exceeds demand in the first quarter of next year, it will be difficult for oil prices to adjust quickly. In particular, inventories cannot accumulate quickly, and there is no basis for a sharp drop in oil prices.
It is understood that last Friday, Saudi Aramco raised the price of December Arab Light crude oil (Arab Light) to Asian customers by US$1.40-2.70 per barrel. “Surveys last week showed that the market had expected the state-owned producer to raise prices in the range of 50 cents/barrel to $1/barrel. More than 60% of Saudi Arabia’s crude oil exports are sold to Asia, China, South Korea, Japan and India It is the largest buyer. Saudi Aramco’s price increase was somewhat higher than market expectations, indicating that Saudi Arabia believes that demand is still improving, especially in Asia.” Yang An believes that at the just-concluded OPEC meeting, the Saudi Oil Minister said that due to the slowdown in consumption , oil inventories will see a “huge” increase in late 2021 and early 2022. The U.S. Energy Agency also judged that the crude oil market will be oversupplied again in 2022, believing that as crude oil production increases, the price of Brent crude oil will fall in 2022.
In Yu Pengsen’s view, the current international crude oil is not in a balance between supply and demand. OECD inventories are still declining. OPEC+’s production reduction implementation rate has always exceeded 110%. Demand Although the supply side has recovered rapidly, the supply has not kept up significantly. Saudi Arabia and other countries are even pessimistic about the overall supply and demand of crude oil. They believe that at the current rate of production increase, there will be an accumulation of supply exceeding demand in December.
“Looking forward to the market outlook, only OPEC+ accelerates the production increase, or the rapid release of U.S. shale oil and other high-cost production capacity around the world can fundamentally reverse the current situation, and global inventories will once again Only with a larger accumulation of crude oil can oil-consuming countries have the confidence to compete with oil-producing countries on prices. Therefore, even if there is a short-term accumulation of crude oil inventories, it does not mean that the price will fall sharply. In order to achieve a lower level again, The price of oil is very difficult,” Yu Pengsen said. </p
