On Tuesday (April 19), Shanghai crude oil prices closed down 1.6 yuan, or 0.23%. The main contract 2206 closed at 695.9 yuan / barrel, down 1.6 yuan / barrel. Oil prices closed down slightly, maintaining a volatile pattern as a whole. The market is looking for a balance between the decline in global crude oil demand and the supply crisis caused by the Conflict between Russia and Ukraine.
Transaction logic: Russian crude oil exports are blocked, OPEC is reluctant to increase production to support oil prices, but the concerns of the epidemic and the release of energy reserves pressure oil prices. Oil prices are still in the shock zone.
From a technical point of view, oil prices remain volatile, but the current price is still running above the long-term moving average, and the main technical indicators are biased towards the bulls. Investors mainly absorb dips.
Resistance: INE crude oil 730.0, US oil 115.80
Support: INE crude oil 680.0, US oil 107.59
China and overseas news
OPEC lowered its global crude oil demand forecast for this year
The Organization of the Petroleum Exporting Countries (OPEC) lowered its expectations for global crude oil demand this year on the 12th, mainly due to the adverse effects of the Russian-Ukrainian conflict.
The latest monthly report on the crude oil market released by OPEC on the 12th predicts that global crude oil demand this year will be 100.5 million barrels / day, a decrease of 400,000 barrels / day compared with the previous forecast. OPEC cut its global economic growth forecast for 2022 to 3.9 percent from 4.2 percent a month ago, and believes that further downward revisions are likely, taking into account the impact of the Russian-Ukrainian conflict and the epidemic. Third-party data showed that the average daily output of OPEC's 13 member countries increased by 57,000 barrels per day to 28.56 million barrels per day in March.
OPEC also expects non-OPEC producers to produce 66.26 million bpd this year, down 300,000 bpd from previous forecasts. Among them, Russia's crude oil production is expected to decline by 500,000 bpd to 11.2 million b/d. OPEC and non-OPEC producers decided on March 31 to maintain their original modest production increase plans in May, raising their total monthly production by 432,000 bpd in May.
In April 2020, OPEC reached a production reduction agreement with non-OPEC oil producers due to the impact of the epidemic on oil demand, and as the economy gradually recovered from the epidemic, it was decided in July 2021 to increase its total production by 400,000 b/d per month from August of that year until the 5.8 million b/d production cut was phased out.
OPEC Secretary-General Bargendo warned on the 11th that if Russian oil is completely embargoed, the international crude oil market will face serious supply risks. According to Reuters, Bargendo said the Russian-Ukrainian conflict could lead to a 7 million bpd reduction in Russia's crude oil and other liquid fuel exports. OPEC believes that the reduction in crude oil supply caused by the Russian-Ukrainian conflict will be difficult to replace, and hinted that it will not increase production more because of this. OPEC said these non-fundamental factors are completely out of its control.
Putin and Saudi Arabia have vowed to uphold the OPEC+ agreement
OPEC and OPEC+ have not publicly commented on the invasion since the beginning of the war in Ukraine, saying only that the market is currently dominated by geopolitical events or geopolitical tensions in Eastern Europe, rather than by fundamental factors. According to a Kremlin statement, Saudi and Russian leaders gave a positive assessment of Saudi and Russian cooperation in the OPEC+ group at a conference call last Saturday.
The Saudi news agency said the Saudi crown prince had received a phone call from Putin to discuss bilateral relations between the two countries and strengthening cooperation in various fields to achieve the interests of the two countries and two peoples. The Saudi News Agency reported: "In the case of the crown prince, he claims that the Kingdom supports efforts to resolve the crisis in Ukraine through political means to achieve security and stability." ”
Despite the turmoil in global oil and energy markets caused by Russia's invasion of Ukraine, OPEC+ has publicly expressed a unified position, reiterating that it is not fundamentals that are currently driving oil prices higher. While many oil-consuming countries have called for more than planned increases, the alliance has stuck to the agreement reached last summer to increase production by 400,000 barrels per month. Some believe that meetings within OPEC+ will be difficult since Russia invaded Ukraine, but OPEC+ breaks that expectation. On the contrary, OPEC+ has held its two shortest meetings since the end of February, and Ukraine has not been mentioned in any public statement.
OPEC, and the extended OPEC+, steer clear of political statements and related matters in policy. Even when its founding members Iraq and Iran were at war in the 1980s, OPEC did not disintegrate.
The next OPEC+ meeting is scheduled for May 5 to decide on production levels for June. There are concerns that the lockdown in Asia will lead to an immediate decline in demand, OPEC+ has not met its quota for several months, and OPEC oil production in March increased by only 57,000 barrels per day from February, as african members' efforts to increase crude oil production partially offset the impact of increased production by core members in the Middle East.
India bought Russian crude oil and coal, and the United States discouraged it to no avail
At present, in the context of the western countries' heavy sanctions against Russia, many countries that have sanctioned Russia's oil and gas resources or have been countered by Russia have begun to buy high-priced oil and gas from the United States. Recently, some countries in the European Union have passed sanctions on Russian coal, and have banned the import of Russian coal, hoping to make Russia's various energy sources unable to sell through this method.
The reality is not so, Russia's various energy has never been short of sales, because of its low price, low transportation costs and other advantages, by many countries, especially in eurasia countries favored, therefore, even if the Western countries stop importing, there will still be many countries choose to buy Russian energy.
According to reports, India has purchased more than 13 million barrels of Russian crude oil since late February, a figure that has set a "new record" for both Russia and India, and it is reported that India's total crude oil imports from Russia in 2021 are only 16 million barrels. India has bought 1.04 million tonnes of coal from Russia in just one month since March, according to another data. Obviously, India has entered a "buy buy buy" model when it comes to buying Russian energy.
On April 11, local time, US President Biden and Indian Prime Minister Modi said in an online video meeting that he hoped That India would not buy Russian crude oil on such a large scale, and White House spokesman Psaki also added that Biden believes that India's large-scale purchase of Russian crude oil is not in India's interests. Ironically, however, India believes that it is in its own interest to do so, and Indian Foreign Minister Jaithsen Sujaldon bluntly said that the United States should focus more on Europe than India.
In the first quarter, the output of major energy products on the mainland continued to grow
According to data released by the National Bureau of Statistics a few days ago, in March, the production of major energy products in industries above designated size increased to varying degrees. Compared with January and February, the growth rate of raw coal production has accelerated, the production of crude oil and natural gas has remained stable, the production of electricity has been basically stable, and the rapid growth of hydropower, wind power and solar power generation. In the first quarter, the output of major energy products such as coal, oil, gas and electricity continued to grow, and the mainland's energy supply was generally stable.
Crude oil production has grown steadily, oil and gas reserves have been increasing production, and the decline in imports has expanded. In March, the production of crude oil was 17.71 million tons, an increase of 3.9% year-on-year, and the growth rate was 0.7 percentage points lower than that of January to February, with an average daily output of 571,000 tons. Imported crude oil was 42.71 million tons, down 14.0% year-on-year, and the decline was 9.1 percentage points larger than that in January and February. In the first quarter, 51.19 million tons of crude oil were produced, an increase of 4.4% year-on-year. Imported crude oil was 127.85 million tons, down 8.1% year-on-year.
Crude oil processing declined slightly. In March, the processing of crude oil was 58.59 million tons, down 2.0% year-on-year, a decline of 0.9 percentage points more than that in January and February, and the average daily processing was 1.890 million tons. In the first quarter, 171.44 million tons of crude oil were processed, down 1.5% year-on-year.
Natural gas production continued to grow, and the decline in imports widened. In March, the production of natural gas was 19.7 billion cubic meters, an increase of 6.3% year-on-year, and the growth rate was 0.4 percentage points slower than that of January and February, with an average daily output of 630 million cubic meters. Imported natural gas was 7.98 million tons, down 8.5% year-on-year, and the decline was 4.7 percentage points wider than that in January and February. In the first quarter, 56.9 billion cubic meters of natural gas were produced, an increase of 6.6% year-on-year. Imported natural gas was 27.82 million tons, down 5.1% year-on-year.
The shutdown of libyan oil fields has exacerbated supply concerns
It is understood that Sharara, Libya's largest oil field, which was forced to close due to protests, produced 300,000 barrels per day. Protesters inside the country gathered in the Sharara oil field to demand the resignation of prime minister Abdul Hamid Dbeibah. Libya's national oil company announced on Monday that some oil production and exports suffered from force majeure and would no longer fulfill its contractual obligations to deliver oil from the Sharara field. The company also warned that there will be a wave of production suspensions in the future.
Libya previously produced nearly 1.2 million barrels per day of crude oil, but the situation in the country is severely unstable, with frequent multi-factional protests closing oil fields or ports. Previously, the El Feel field near Sharara was also shut down for the same reason, producing 65,000 barrels per day. According to relevant estimates, the country's oil production fell by 535,000 barrels per day.
OANDA analyst Jeffrey Halley said that the global oil supply is already very tight, and even the slightest supply disruption can have a huge impact on oil prices. Oil prices rose above $100 a barrel this year as the escalation of the Russian-Ukrainian conflict disrupted an already tense market and prompted some traders to shy away from Russian crude. Not only that, but the spot spread on Brent crude, a key oil market indicator, suggests that bullish sentiment is on the rise.
Institutional and analyst perspectives
Hengyin Futures: Short-term crude oil prices show a high-level shock operation pattern, and structural contradictions in the oil market still exist in the medium term
In the short term, oil prices are affected by concerns about the spread of the epidemic and the release of reserves by the IEA; but the European Union may impose sanctions on Russian oil, and OPEC said that the lack of Russian oil supply will not be able to make up, boosting oil prices. Strategy: Short-term crude oil prices show a high-level oscillation pattern. Risk Warning: Cyclical changes in the Fed's monetary policy; geopolitical game prospects in the Middle East and Eastern Europe.
In the medium term, structural contradictions in the oil market still exist. Tensions were renewed over the weekend, pushing up the risk premium on crude oil rising again, with the SC main contract up more than 2% during the day. Combined with the news, there is a possibility of further escalation of the situation in Russia and Ukraine and the supply doubts caused by it to support the strong trend of the oil market, but traders are cautious and constantly weigh the supply and demand prospects of the oil market (especially the impact of the Release of Reserves in the United States and other Western countries on the supply side of crude oil), and the oil market is still facing greater volatility. In terms of operating ideas, in the short term, the expectation of intensification of the conflict between Russia and Ukraine and the reduction of Russian crude oil supply have once again boosted market sentiment, and crude oil prices still have upward risks. After entering May, the International Energy Agency and the United States opened crude oil dumps, and oil prices faced a certain bearish suppression, but the strength was limited. In the medium term, structural contradictions in the oil market still exist, and oil prices may be dominated by high volatility during the year. Recently, the market has fluctuated greatly, prompting investors to pay attention to risk control.
Guotai Junan Futures Research Report Crude Oil: High Volatility
There is currently no new major supply-demand contradiction in the crude oil market, and the further deterioration of the situation in Eastern Ukraine, the decline in Libyan production, and the Iraq-Turkey conflict have exacerbated the possibility of marginal tightening of the supply side of the crude oil market and supported oil prices. However, the IEA's downward revision of the global economic growth forecast partially hedged the above positives, dampening the rise in oil prices and maintaining a volatile market during the day. Objectively speaking, the current supply of crude oil market is still tight, and the high price of overseas natural gas and the high level of diesel cracking are the best proof. We also do not think that the average price of oil prices will fall sharply throughout the second quarter, and the probability of low inventory and low supply will remain high, and it is still necessary to guard against the upward risk of oil prices for most of the second quarter. If there is a phased correction in oil prices, it will be a good opportunity for low prices to be multi-sided and monthly positive
GF Futures Crude Oil: Libya closes its largest oil field due to civil unrest The risk of supply disruption increases
Russia's supply shortage is still fermenting, and there are new accidents on the supply side, Libya has closed the largest oil field Sharara due to protests, which has a daily output of 300,000 barrels, after the El Feel oil field with a daily output of 65,000 barrels per day also stopped production for the same reason, two Libyan ports stopped loading oil due to political deadlock, and industry sources said that the country's oil production fell by 535,000 barrels per day. The current risk of supply disruptions is once again supporting oil prices, but Chinese data shows that the epidemic has had a negative impact on consumption and employment, and economic growth is threatened, putting oil prices under pressure. Short-term supply interruption sentiment dominates the market, and it is recommended that every pullback can be done long, rolling operations
This article originated from Huitong Network