The performance of INE crude oil in Friday night trading gave domestic investors a surprise. Oil prices rose strongly and drove the domestic energy and chemical sector and international oil prices to strengthen. Crude oil has been falling for several days in the past week. Although the cumulative decline of 2% in a week is not large, as the saying goes, there is no harm without comparison. Compared with the strength of industrial products such as rebar and copper, the recent performance of the crude oil and energy and chemical sectors has been very dismal. The upward path for oil prices is quite difficult under the multiple negative impacts. The impact of the epidemic on crude oil demand has made the market increasingly worried, and variables in U.S.-Iran relations have also disturbed market sentiment. Oil prices plummeted on Tuesday and Wednesday, and there was a sense of panic on the market. Unlike the increase in speculative long positions in gold, silver, copper, etc., the latest position data released on Saturday showed that as of the week of April 20, the speculative net long position in WTI crude oil futures decreased by 4,778 lots to 372,169 lots.
Obviously the negative impact has dominated the short-term trend, which has also suppressed the market’s optimism based on the economic improvement and the expected increase in crude oil demand. However, we have seen from the recent It can be seen from the trend of oil prices in the two trading days that although oil prices fell under the negative pressure, as the price moved closer to the 60-day moving average, the 60-day moving average began to play a supporting role, rebounds continued to occur, and the long and short forces gradually changed, rebounding The energy is building. This long-short game shows that although it is difficult for oil prices to resume rising immediately, there is no need to be overly pessimistic about the outlook for crude oil. The lower support of the high oil price oscillation range is difficult to break. In the future, we need to pay attention to whether as market sentiment stabilizes, the market’s focus will return from the epidemic to economic recovery and inflation concerns, which will lead to a recovery in oil prices.
The number of new confirmed cases in India continues to set new records
The country that has attracted the most attention recently is probably not India. No wonder we have placed India in the first module of our analysis for two weeks in a row. India is a country with high hopes. Judging from the outlook of the BP Energy Statistical Yearbook, India will become the most important demand growth point in the crude oil market in the next 20 years. India is currently the third largest consumer and importer of crude oil in the world, and its future development potential is beyond doubt. However, from the current realistic economic development perspective, catching up with China and the United States should be an unreachable goal for India.
In April, India has given full play to its advantage of “large numbers of people and strength”, from an average of less than 20,000 confirmed cases per day in March to confirmed cases in a single day. 340,000. At this rate, India can not only catch up with the United States under Trump’s term, but also have the opportunity to be promoted to the only existence. And this is not something to be proud of. In fact, India is already struggling with this. Following British Prime Minister Johnson, Japanese Prime Minister Yoshihide Suga canceled his visit to India. Modi also canceled his visit to France next month and his trip to Portugal for the India-EU Summit. , more and more countries have strengthened their quarantine on India, and India has also called on people to stay at home and reduce activities.
According to the latest real-time statistical data from the WHO, as of 15:10 Central European Time (21:10 Beijing time) on April 24, the number of confirmed cases worldwide was higher than the previous day. The number of cases increased by 849,130, reaching 145,216,414; the number of deaths increased by 13,120, reaching 3,079,390. On April 23, there were 894,043 new confirmed cases of COVID-19 globally, with the number of new cases in a single day once again reaching the highest level since the outbreak, and 14,151 new deaths. Asia has become the absolute hardest-hit area, with 480,000 new confirmed cases, of which India accounts for 70%. The epidemic situation in Europe and the Americas has been relatively stable recently, basically maintaining a range of 150,000-200,000 per day. The European epidemic situation that initially attracted market attention seems to have passed its peak. French officials have begun to announce preliminary plans for “unblocking”, which has a negative impact on crude oil. That’s good news for the market.
In terms of vaccines, China and the United States are still far ahead in terms of vaccination volume, with both exceeding 210 million doses. The number of vaccinations in other regions is obviously an order of magnitude less. European Commission President von der Leyen said on April 23 that the EU’s vaccine supply and vaccination are accelerating, and that 70% of adults are expected to be vaccinated against the new coronavirus by July this year. The market once reported that India had administered more than 130 million doses of vaccination, but there was no official data. According to Reuters estimates, less than 4% of India’s more than 1.3 billion people have received the COVID-19 vaccine.
But we cannot leave India aside and look at other regions with relatively good control. The wooden barrel theory is acting on the market at this time. If the epidemic in India is not well controlled and multiple types of mutant viruses emerge, it is still unknown whether the vaccines currently inoculated around the world can continue to work. If the mutant types break through the vaccine’s defense range, the global epidemic will still be at risk of another outbreak. At the edge, the normal operation of the global economy and normal personnel exchanges will continue to be affected. At present, it is obvious that the whole world is highly vigilant about the epidemic in India, and strengthening isolation in India has become the current consensus.
The supply and demand levels are long and short
On Wednesday, there was news that the United States Wish��Easing restrictions on Iran’s oil, financial and other industries will help narrow differences in negotiations, and oil prices plummeted on the news. Iran wants to see more concrete steps, but despite the progress, Iran’s top diplomat warned that difficult negotiations on the Iran nuclear deal will continue for weeks. The talks in Vienna were further complicated by Iran’s refusal to meet directly with U.S. representatives. People involved in the negotiations said progress was being made as the United States laid out more clearly its options for lifting sanctions.
After former US President Trump announced his withdrawal from the Iran nuclear agreement in 2018, President Biden hopes to rejoin the agreement. Senior diplomats concluded five days of talks in Vienna this week, with negotiations set to resume next week. Participants said the talks have made some progress and the United States is open to easing anti-terrorism sanctions targeting Iran’s central bank, Iran’s state-owned oil and tanker companies, and key industries such as steel and aluminum. A senior European official said Washington also hinted at possible easing of sanctions on Iran’s textile, automotive, shipping and insurance industries. These are all industries identified in the Iran nuclear deal as areas in which Iran can obtain economic benefits.
The current consensus in the market is that the United States will eventually lift sanctions on Iran, but the timing and specific content of the lifting of sanctions are uncertain. As time goes by, the relevant content of lifting sanctions on Iran will gradually become clearer. Goldman Sachs previously judged that if sanctions were lifted and Iranian crude oil returned, the oil price outlook would be lowered by $5/barrel.
It is not all negative factors on the supply side. Libya has announced that its oil production has dropped to about 1 million barrels per day in recent days, and may fall further due to budget issues. In March, Libyan crude oil production just set a new record since the resumption of production, reaching 1.25 million barrels per day. Oil prices rebounded significantly after this news came out.
This week’s EIA and API weekly reports in the United States are not very instructive. Overall, crude oil inventories are slightly overstocked and refined oil inventories are declining. Russian Deputy Prime Minister Novak said that the current supply and demand in the crude oil market remain balanced. Regarding the OPEC+ regular monthly meeting on April 28, the market believes that this meeting will only conduct technical discussions and will not adjust the content of production cuts.
The demand side is still the bullish factor that currently has high hopes. The economic data released last week in China, the United States, and Europe all show that the economic recovery is progressing well. Like the optimistic outlook in the IEA and OPEC monthly reports, the recovery of crude oil demand is worth looking forward to. China’s economic recovery is ideal. Since the beginning of this year, driven by the demand for refined oil products, gasoline and diesel prices have performed strongly, and the cracking spread has been at a relatively high position for the same period in recent years. Eurozone Purchasing Managers Index (PMI) data for April showed a stronger-than-expected recovery, with more countries in Europe beginning to relax epidemic restrictions.
Benefiting from the control of the epidemic, French Prime Minister Castex said that as the first step towards gradually relaxing the third nationwide blockade, the country’s schools will reopen on Monday. reopen. Starting from May 3, domestic travel restrictions will be lifted. But the 7pm curfew will remain in place until the epidemic is completely under control. He also said that if the epidemic situation improves, some businesses and cultural venues, as well as bars and restaurants, may be allowed to reopen around mid-May. Meanwhile, Italy is scheduled to start easing restrictions next week, and Greece plans to relax restrictions in May. Germany is also considering offering travel privileges to vaccinated people.
Demand for summer holidays in the United States is also expected to surge, with the number of people applying for unemployment benefits falling to a 13-month low last week. Some analysts said: “The outlook for oil demand in the United States continues to strengthen. The latest weekly unemployment benefits bring more good news to the world’s largest economy.” As the United States enters the summer holiday, most people have been depressed for a long time. demand for travel and vacation will be unleashed and further drive demand for transportation fuels. </p
