After the sharp decline in crude oil prices last Monday, it was like a tanker that lost its power. Bulls and bears have never been able to gain an absolute advantage. Crude oil remains operating within a narrow range, and it is difficult to determine the direction. For the current market, the main contradictions have become increasingly blurred, and the potential contradictions have not yet fermented into the main logic. This is why crude oil prices are relatively “confused.” “s reason.
One of the more important things last week was that the United States and Iran held talks in Vienna, and the United States declared that it would lift unnecessary sanctions on Iran. U.S. State Department spokesperson Price said on April 7, local time, that the United States is ready to lift sanctions on Iran that are “contrary to the 2015 Iran Nuclear Deal” in order to resume compliance with the Iran nuclear agreement, but Price did not provide any information. more details. The United States is using a “carrot” to win over Iran in exchange for concessions from Iran on key issues.
Although the United States tries its best to show goodwill, we have also seen the problem of the bombing of an Iranian cargo ship. According to news from the Associated Press on April 7, Iranian state television confirmed that an Iranian cargo ship was attacked. The New York Times reported that it was Israel that attacked an Iranian cargo ship in the Red Sea, and Israel also admitted it. We all know that Israel’s behavior will most likely reflect the intentions of the United States. Although the United States later stated that it was not involved in this matter, there is no guarantee that this matter must have nothing to do with the United States. During the talks between the United States and Iran, the United States used Israel to threaten Iran and at the same time lured Iran in Vienna. This made it clear that it wanted to win over Iran as soon as possible.
The Iranian issue is crucial to oil prices. When market reports showed some signs of peace talks between the United States and Iran, oil prices fell slightly. Iranian crude oil is now squeezed out of the international market. If U.S.-Iran relations can be eased and the U.S. lifts sanctions on Iran, more than 2 million barrels per day of Iranian crude oil will return to the market, which will be a huge blow to OPEC’s current efforts.
Goldman Sachs said that an agreement between the United States and Iran may still take several months, and other OPEC producers will also need to adapt to the potential increase in Iranian output. Goldman Sachs also said that before the end of 2021, if Iran’s exports normalize, its expectations for Brent prices this year and next year will be reduced by US$5/barrel; if no agreement is reached between the United States and Iran, expectations for oil prices next year will be Increase by $10/barrel.
In fact, from the perspective of Middle Eastern countries, Israel most wants to make Iran surrender and reach a new Iran nuclear agreement. Other oil-producing countries are currently not particularly willing to see the Iran nuclear agreement. . After all, the country that OPEC has worked so hard to build is very likely to fall short because of Iran. The price of crude oil fell from US$80/barrel to US$50/barrel in 2018, which is still vivid in our minds. From another perspective, based on current market expectations, the probability of Iran completely compromising in a short period of time is not very high. Although the United States has announced that it will lift sanctions on Iran, the specific content of the lifting and the specific lifting time are still unclear. Unknown, this is most likely a piece of paper released by the United States. If Iran does not compromise, then the time to lift it will be far away. Therefore, in the short term, the Iran issue will not provide more substantial negative effects. Since the announcement of the news, the oil price Clues can also be seen in the performance.
India has become the eye of the storm of the global epidemic
Regarding the epidemic issue, we have seen another outbreak of the epidemic in Asia. Looking at the breakdown, the main country with the outbreak is India. As of April 8, the number of newly confirmed cases in India reached 132,000 that day, which is the highest record since the outbreak in India. In addition to India, Turkey also had more than 50,000 new confirmed cases that day, and Iran also had more than 20,000 new confirmed cases in a single day. In addition, the situation in countries such as the Philippines and Iraq is not very good. At present, the number of newly confirmed cases in Asia in a single day has exceeded 280,000, and India alone accounts for half of it. This is enough to show that in some relatively underdeveloped countries and some countries where it is difficult to obtain sufficient quantities of vaccines, another outbreak of the epidemic is still relatively dangerous.
For some countries with vaccines, such as the United States and the United Kingdom, the number of new confirmed cases on that day has declined significantly, and the number of new confirmed cases in the entire Americas has remained stable. Europe Although the number of new confirmed cases has increased, it is within expectations and there has been no more violent outbreak. Judging from the global vaccination situation, the United States has currently vaccinated 3 million people in a single day, and China is also accelerating the speed of vaccination, with a single-day vaccination volume of more than 4.5 million. The UK has vaccinated nearly 400,000 people in a single day, and Germany has vaccinated 250,000 people in a single day. Basically, countries that can get vaccines have controlled the epidemic relatively well.
In addition, AstraZeneca’s vaccine has had many problems recently, and various countries are also more cautious about AstraZeneca’s vaccine. When the vaccine is not sufficient to begin with, This has further aggravated the vaccine tension. Judging from market expectations, vaccine production capacity will be significantly increased this summer, vaccine popularization may be accelerated, and the epidemic control situation may also reach an inflection point. Therefore, a rapid recovery of the global economy after the summer cannot be ruled out.��Crude oil demand is improving rapidly. So from the demand side, if crude oil prices continue to rise sharply, we will have to wait until demand substantively improves before we can see it. According to the degree of vaccination, the time point is also in the summer, which is in line with the summer forecast by Goldman Sachs. Oil prices are likely to exceed $80/barrel.
The supply-side push effect continues to weaken
Until the vaccine is not fully popularized enough to accelerate the recovery of crude oil demand, the main variable in the crude oil market is still concentrated on the supply side. The supply side is divided into three aspects: First, the efforts of OPEC+. However, recently we have also seen that OPEC+ has begun to gradually relax the production reduction agreement. By July, it will increase production by 2 million barrels per day. As prices stabilize and the demand side continues to It is expected that OPEC’s restoration of production capacity will continue; secondly, the fermentation of the Iran issue is a potential factor that the market is more worried about. If the United States and Iran reach a reconciliation, Iran will once again release more than 2 million barrels per day of production capacity. Before demand recovers, the market may not be able to handle an increase in supply of 4 million barrels per day, which will be a big blow to prices. The third is concerns about U.S. crude oil production. According to oil prices, drilling platforms and crude oil production At the same time, referring to the relationship between oil prices and production after the oil price crash in 2016, the current time point is exactly when U.S. crude oil production may enter a period of rapid growth. Although last week’s data showed that U.S. crude oil production fell by 200,000 barrels per day, However, the production problem in the United States may become a potential negative factor on the supply side.
However, fortunately, OPEC will hold a production reduction meeting every month. If US-Iran relations ease in the short term, Iranian crude oil To quickly enter the market, we do not rule out the possibility that OPEC will continue to take certain measures, but these measures are only to maintain prices from falling sharply. Therefore, before the demand for crude oil has truly recovered, it may be difficult for oil prices to rise substantially. There is a high probability that the oscillation trend will remain at this stage, waiting for the demand side to gradually improve. EIA expects that the crude oil market will remain in supply shortage in the second quarter, and that the overall market will maintain a balance between supply and demand in the third quarter.
In addition, Biden launched a US$2.25 trillion economic stimulus policy after the US$1.9 trillion stimulus plan. Judging from current market expectations, the market is not optimistic about this US$2.25 trillion new infrastructure project. After all, from the Obama era to the Trump era, and then to the Biden era, three consecutive presidents have waved the flag to return manufacturing to the United States. , but the effect is not obvious. Therefore, the market does not have high hopes for Biden’s new infrastructure policy. The demand-stimulating effect of new infrastructure projects is difficult to count on at least in the short term. Therefore, the benefits at the macro level will be relatively scarce, and crude oil prices will not be stable. It will rise sharply due to favorable macroeconomic stimulus.
The trend of the U.S. dollar index has recently been a major factor affecting crude oil prices. The U.S. dollar index fell to a minimum of 89 and then began to rebound. The maximum has rebounded to 93 points. Although the U.S. dollar index trended weak last week, the probability of continuing to weaken significantly is very small. At least in the short term, we can no longer expect the weak U.S. dollar to push up crude oil prices to continue to rise. To sum up, the current crude oil market is under heavy pressure, and at least the short-term price upward resistance is relatively large. However, if demand can recover, crude oil prices will regain momentum to rise, explaining that it is not impossible for oil prices to break through new highs this year. Therefore, for investors with strategic bottom-buying intentions, we still recommend waiting for the time being. If the market can provide a price of Brent crude oil below 60 US dollars per barrel, they can gradually make arrangements. </p
