English
Market News Oil prices rose like rainbows during the Dragon Boat Festival holiday. OPEC+'s decision to increase production makes all parties happy?
Oil prices rose like rainbows during the Dragon Boat Festival holiday. OPEC+'s decision to increase production makes all parties happy?
Before the holiday, investors mainly avoided risks, and oil prices fell. These boots landed until the uncertainty was eliminated, and the optimism was high when the overall impact was obviously bullish, which drove oil prices to rise sharply for two consecutive days. The most important factor is that the tight supply and demand situation of the oil market itself has not been relieved for a long time, which is the foundation of the strong oil price.
2022-06-06
12178
During the Dragon Boat Festival holiday, oil prices rose like a rainbow, rising by more than 7 US dollars compared with the pre-holiday period, making it the largest increase in the commodity market. Behind this performance is that the holiday coincides with the announcement of some important factors such as the key OPEC and EIA inventory announcements. Window, before the holiday, investors mainly avoided risks, oil prices fell, these boots landed until the uncertainty was eliminated, and the overall impact was obviously bullish in nature, optimism was high, and oil prices rose sharply for 2 consecutive days. Of course, the most important factor is that the tight supply and demand situation of the oil market itself has not been relieved for a long time, which is the foundation of the strong oil price.
Time is the best tool to unravel the mystery. In the past two months, there have been many debates on the interpretation of the balance of supply and demand in the crude oil market. When the time passed May, three months have passed since the conflict between Russia and Ukraine, and the energy market pattern Subversive changes are taking place. The United States and the International Energy Agency jointly conducted a century-old reserve sale for a month. Investors found that when the traditional peak consumption season arrives, the tight supply situation in the oil market has not been relieved. The prices of gasoline and diesel in Europe and the United States are still soaring and continue to refresh the history. It seems that the efforts of consuming countries to cool down oil prices have not reversed the situation of short supply in the crude oil market. The head of the International Energy Agency, Birol, called the energy crisis "much worse" than the oil crisis of the 1970s and was expected to last longer. Oil markets can get tight in the summer, with bottlenecks in diesel, gasoline or kerosene supplies. "We're in a time of war, we're in an energy crisis, and we'd better prepare for more difficult times." Birol even said Desperately suggesting that Germany should impose temporary speed limits on motorways, he said while participating in a panel discussion on energy issues that he suggested that Europe should even consider turning down the heaters a few degrees this winter, which would help ensure energy supply.
In the face of the oil market with a high fever, OPEC has to stand up and be a hero! In particular, before the OPEC monthly meeting on June 2, Saudi Arabia revealed that it promised its Western allies to increase crude oil production, which made OPEC suddenly become the focus of the market. After Saudi Arabia repeatedly rejected the White House and the G7's call for an immediate increase in crude oil production, the United States. Relations with the Saudi leadership have been strained. But that changed ahead of the OPEC meeting in June, when Saudi Arabia had told Western allies it was ready to ramp up production if Russian crude production fell sharply under the weight of sanctions, sources familiar with the matter said. It has also given OPEC's monthly meeting in June the rare attention it has received recently. In the end, the ministers at the OPEC+ monthly meeting agreed to increase production by 648,000 barrels of crude oil per day in July and August, an increase of about 50% from the previous growth plan, which means that OPEC has begun to adapt to the current summer demand of the crude oil market and began to moderately increase crude oil production. , in order to avoid the risk of runaway oil prices due to the large gap in supply shortages. However, judging from the current market reaction, it is obvious that this production increase is still too conservative, and it is difficult to alleviate the tight supply situation in the crude oil market during the peak consumption season. Oil prices recovered most of their lost ground after a quick rebound after OPEC's monthly meeting.
The tight supply situation since May has caused anxiety again
Since May, the sixth round of EU sanctions against Rosneft has gone through several rounds of iterations. With the insistence of core countries such as Germany, a partial embargo of Russian oil has been finally reached. A meeting of diplomats on Thursday supported the plan, people familiar with the matter said. The move would be the EU's toughest yet to curb Russia's ability to finance an invasion of Ukraine. The measures will ban the purchase of Russian crude oil shipped to member states after six months and refined products after eight months. Pipeline crude oil is not included for the time being. That means about two-thirds of European crude oil imports from Russia will be restricted. In addition, Germany and Poland have pledged to stop importing oil through the Druzhba pipeline in the short term, and the coverage of the Russian oil ban is expected to reach 90% by the end of this year. However, it seems that the final amount of Russian oil due to sanctions is still an uncertain topic. Russian Deputy Prime Minister Novak said in an interview that the EU's import ban on Russian seaborne crude oil and petroleum products will take 6-8 months. complete implementation, during which the market will be rebalanced, and Russian crude oil and refined products will flow to new markets; and he believes that the EU's decision is based on political reasons, not economic ones, from the perspective of energy supply security, the EU's interest in Russian oil The embargo is wrong, the EU oil import ban will have little effect on the global market, but the EU itself will face severe shortages of petroleum products. At present, Russia’s crude oil production has fallen by about 1 million barrels. If it finds a new market for its own oil, the impact of European sanctions on its oil may be as expected, but the impact on the trade pattern will continue to impact oil prices. reflected in the price.
What is more interesting is that according to the latest statistics from the US Energy Information Administration (EIA), a CCTV news report, in March this year, Russia rose from the ninth largest crude oil supplier to the United States to sixth, reaching 4.218 million barrels. At the same time, in terms of the overall supply of crude oil and refined oil products to the United States, Russia still ranks third, increasing by 8.7% year-on-year to 17.825 million barrels. The analysis pointed out that the United States has been instructing Europe to impose an embargo on Russian oil and gas, while buying Russian oil aggressively. Some analysts pointed out that the United States has long made a "small calculus" for continuous profit: while making its allies pay for the negative impact of sanctions against Russia, it will make a lot of "war money". The United States has become the biggest winner in Europe's "energy supply crisis", once again exposing the true face of the selfish and arrogant hegemony of the United States. Earlier data proved that India is also importing a record amount of Russian crude oil, and has greatly increased its export of refined oil products, taking this opportunity to make a fortune. The United States is very dissatisfied with this.
In order to cool down the oil market, the United States has increased its strategic crude oil selling since May, putting more than 23 million barrels of strategic crude oil into the market in 4 weeks. As of May 27, the EIA strategic oil reserve inventory was on June 19, 1987. It was the lowest for the week, though that did not ease the tight supply in the oil market. Data showed that the U.S. oil market inventory fell more than expected. Specific data showed that the U.S. EIA crude oil inventory changes in the week ended May 27 actually announced a decrease of 5.068 million barrels, an expected decrease of 1.35 million barrels. Gasoline inventories actually reported a decrease of 711,000 barrels, compared with an expected increase of 533,000 barrels, while the previous value decreased by 482,000 barrels; the actual report of refined oil inventories decreased by 530,000 barrels, compared with an expected increase of 99 barrels, and the previous value increased by 1.657 million barrels. Not only did U.S. commercial inventories continue to fall, but the refined oil market situation was even more severe. U.S. Midwest refined oil inventories fell last week to the lowest level since December 2020. U.S. East Coast refined oil inventories fell to record lows last week. On the one hand, the decline in U.S. oil inventories has ushered in the peak summer consumption season at home, and on the other hand, external demand has increased. The EIA report pointed out that gasoline exports soared to the highest level since December 2018. Mexico and other Latin American countries from the U.S. Gulf Coast More and more goods are being imported, especially when it wants to help increase the supply of European oil products in exchange for European sanctions against Russia, which has led to increased exports of crude oil and refined oil in US stocks.
Behind OPEC's decision to increase production is a rebalancing of interests
On June 2, local time, at the 29th ministerial meeting of the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing countries (OPEC+), ministers decided to increase crude oil production by 648,000 barrels in July and August 2022. / day, increasing the production rate by about 50% compared with the production increase plan in April. Although OPEC has decided to increase the number of planned production increases, in terms of timing, the increase will be distributed proportionally among member countries as usual. Production quotas will still be raised, taking into account countries such as Angola, Nigeria and Russia that have failed to increase production. This could mean that the actual increase in output will be lower than the official data, which has dispelled fears of a sharp increase in OPEC production, and oil prices have risen sharply in the first time after the meeting. Shortly after the meeting, the U.S. EIA inventory data exceeded expectations again, and crude oil inventories fell by 5.068 million barrels, far exceeding market expectations. The peak consumption season is coming, which makes the supply tightness worry to dominate the market again, and oil prices quickly recovered lost ground and resumed a sharp rise.
The core factor in OPEC's plan to increase production this time is the change in Saudi Arabia's attitude. Relations between the two countries have improved amid reports that several senior U.S. delegations, including the White House Middle East policy coordinator and the White House energy envoy, have visited Saudi Arabia in recent weeks. Saudi Arabia has agreed to change its stance to stabilize oil prices as part of a settlement with the Biden administration, people familiar with the matter said. Saudi Arabia also assured that if a supply crunch hits the oil market, it will eventually respond by raising production. Although Saudi Arabia keeps saying that the oil market should not be affected by politics, in fact, judging from the interest game between Saudi Arabia and the United States, the crude oil market is full of political attributes, "Saudi Arabia is aware of these risks, and losing control of oil prices is not in line with their interests,” said a person familiar with Saudi thinking. With the United States begging it to increase production to ease supply constraints, there is news that there is "a lot of pressure" on Biden's side. The mid-term elections in November are looming as U.S. gasoline prices soar to record levels. Real pressure is forcing Biden to soften his stance, reach a compromise with Saudi Arabia, and increase oil production. In addition, "saving points" for the mid-term elections and promoting the normalization of relations between Israel and Saudi Arabia are also important issues for Biden's "compromise" trip. The White House welcomed the decision at OPEC's monthly meeting in June, praising Saudi Arabia's role in OPEC+ reaching consensus and boosting output. Taking into account the production capacity constraints of various countries, Saudi Arabia will also consider increasing production appropriately without putting too much pressure on oil prices in exchange for the United States' guarantee of its national interests. Saudi Arabia is expected to be a major winner of this production increase. .
Russia also expressed support for OPEC+’s decision to increase production by 648,000 barrels per day in July and August, and considered it necessary. Russian Deputy Prime Minister Novak said there is no doubt that this is the right decision to balance market supply and demand; Novak also emphasized that the EU's import ban on Russian seaborne crude oil and petroleum products will take 6-8 months to be implemented, during which time the market will rebalance and Russian crude oil and refined oil will flow to new markets; there are data showing Russian exports Resilience remains. Analysts say the rise in offshore crude inventories is because more and more crude is going further afield — particularly in Asia. Before the Russo-Ukrainian war, more Russian crude was shipped to nearby destinations in Northwest Europe. Novak said that it is important for OPEC+ to continue to cooperate. The OPEC+ agreement is valid until the end of the year, and the agreement retains Russia's core position in the organization. This decision will help balance the global oil market.
Overall assessment The high fever of the oil market has not improved investors' psychological expectations after OPEC's plan to increase production. The cracking profits of refined oil products in the United States and Europe continue to hit record highs. Against this background, oil prices also rebounded strongly during the Dragon Boat Festival holiday in my country. , which rose nearly 10 US dollars from the low on Thursday, and continued to break through the high in 2 months. Until there is no negative factor in demand in the peak season of consumption, it is difficult to see the momentum of weak oil prices for the time being, especially the boots that investors are worried about after the OPEC meeting. After landing, we will maintain strong expectations for oil prices in the short term. In the later stage, we should pay attention to the increasing pressure on the economy after oil prices exceed US$120. This will impact the market again from the macro level. This game process is expected to continue. Pay attention to the rhythm.
Article source: Energy Research and Development Center
Time is the best tool to unravel the mystery. In the past two months, there have been many debates on the interpretation of the balance of supply and demand in the crude oil market. When the time passed May, three months have passed since the conflict between Russia and Ukraine, and the energy market pattern Subversive changes are taking place. The United States and the International Energy Agency jointly conducted a century-old reserve sale for a month. Investors found that when the traditional peak consumption season arrives, the tight supply situation in the oil market has not been relieved. The prices of gasoline and diesel in Europe and the United States are still soaring and continue to refresh the history. It seems that the efforts of consuming countries to cool down oil prices have not reversed the situation of short supply in the crude oil market. The head of the International Energy Agency, Birol, called the energy crisis "much worse" than the oil crisis of the 1970s and was expected to last longer. Oil markets can get tight in the summer, with bottlenecks in diesel, gasoline or kerosene supplies. "We're in a time of war, we're in an energy crisis, and we'd better prepare for more difficult times." Birol even said Desperately suggesting that Germany should impose temporary speed limits on motorways, he said while participating in a panel discussion on energy issues that he suggested that Europe should even consider turning down the heaters a few degrees this winter, which would help ensure energy supply.
In the face of the oil market with a high fever, OPEC has to stand up and be a hero! In particular, before the OPEC monthly meeting on June 2, Saudi Arabia revealed that it promised its Western allies to increase crude oil production, which made OPEC suddenly become the focus of the market. After Saudi Arabia repeatedly rejected the White House and the G7's call for an immediate increase in crude oil production, the United States. Relations with the Saudi leadership have been strained. But that changed ahead of the OPEC meeting in June, when Saudi Arabia had told Western allies it was ready to ramp up production if Russian crude production fell sharply under the weight of sanctions, sources familiar with the matter said. It has also given OPEC's monthly meeting in June the rare attention it has received recently. In the end, the ministers at the OPEC+ monthly meeting agreed to increase production by 648,000 barrels of crude oil per day in July and August, an increase of about 50% from the previous growth plan, which means that OPEC has begun to adapt to the current summer demand of the crude oil market and began to moderately increase crude oil production. , in order to avoid the risk of runaway oil prices due to the large gap in supply shortages. However, judging from the current market reaction, it is obvious that this production increase is still too conservative, and it is difficult to alleviate the tight supply situation in the crude oil market during the peak consumption season. Oil prices recovered most of their lost ground after a quick rebound after OPEC's monthly meeting.
The tight supply situation since May has caused anxiety again
Since May, the sixth round of EU sanctions against Rosneft has gone through several rounds of iterations. With the insistence of core countries such as Germany, a partial embargo of Russian oil has been finally reached. A meeting of diplomats on Thursday supported the plan, people familiar with the matter said. The move would be the EU's toughest yet to curb Russia's ability to finance an invasion of Ukraine. The measures will ban the purchase of Russian crude oil shipped to member states after six months and refined products after eight months. Pipeline crude oil is not included for the time being. That means about two-thirds of European crude oil imports from Russia will be restricted. In addition, Germany and Poland have pledged to stop importing oil through the Druzhba pipeline in the short term, and the coverage of the Russian oil ban is expected to reach 90% by the end of this year. However, it seems that the final amount of Russian oil due to sanctions is still an uncertain topic. Russian Deputy Prime Minister Novak said in an interview that the EU's import ban on Russian seaborne crude oil and petroleum products will take 6-8 months. complete implementation, during which the market will be rebalanced, and Russian crude oil and refined products will flow to new markets; and he believes that the EU's decision is based on political reasons, not economic ones, from the perspective of energy supply security, the EU's interest in Russian oil The embargo is wrong, the EU oil import ban will have little effect on the global market, but the EU itself will face severe shortages of petroleum products. At present, Russia’s crude oil production has fallen by about 1 million barrels. If it finds a new market for its own oil, the impact of European sanctions on its oil may be as expected, but the impact on the trade pattern will continue to impact oil prices. reflected in the price.
What is more interesting is that according to the latest statistics from the US Energy Information Administration (EIA), a CCTV news report, in March this year, Russia rose from the ninth largest crude oil supplier to the United States to sixth, reaching 4.218 million barrels. At the same time, in terms of the overall supply of crude oil and refined oil products to the United States, Russia still ranks third, increasing by 8.7% year-on-year to 17.825 million barrels. The analysis pointed out that the United States has been instructing Europe to impose an embargo on Russian oil and gas, while buying Russian oil aggressively. Some analysts pointed out that the United States has long made a "small calculus" for continuous profit: while making its allies pay for the negative impact of sanctions against Russia, it will make a lot of "war money". The United States has become the biggest winner in Europe's "energy supply crisis", once again exposing the true face of the selfish and arrogant hegemony of the United States. Earlier data proved that India is also importing a record amount of Russian crude oil, and has greatly increased its export of refined oil products, taking this opportunity to make a fortune. The United States is very dissatisfied with this.
In order to cool down the oil market, the United States has increased its strategic crude oil selling since May, putting more than 23 million barrels of strategic crude oil into the market in 4 weeks. As of May 27, the EIA strategic oil reserve inventory was on June 19, 1987. It was the lowest for the week, though that did not ease the tight supply in the oil market. Data showed that the U.S. oil market inventory fell more than expected. Specific data showed that the U.S. EIA crude oil inventory changes in the week ended May 27 actually announced a decrease of 5.068 million barrels, an expected decrease of 1.35 million barrels. Gasoline inventories actually reported a decrease of 711,000 barrels, compared with an expected increase of 533,000 barrels, while the previous value decreased by 482,000 barrels; the actual report of refined oil inventories decreased by 530,000 barrels, compared with an expected increase of 99 barrels, and the previous value increased by 1.657 million barrels. Not only did U.S. commercial inventories continue to fall, but the refined oil market situation was even more severe. U.S. Midwest refined oil inventories fell last week to the lowest level since December 2020. U.S. East Coast refined oil inventories fell to record lows last week. On the one hand, the decline in U.S. oil inventories has ushered in the peak summer consumption season at home, and on the other hand, external demand has increased. The EIA report pointed out that gasoline exports soared to the highest level since December 2018. Mexico and other Latin American countries from the U.S. Gulf Coast More and more goods are being imported, especially when it wants to help increase the supply of European oil products in exchange for European sanctions against Russia, which has led to increased exports of crude oil and refined oil in US stocks.
Behind OPEC's decision to increase production is a rebalancing of interests
On June 2, local time, at the 29th ministerial meeting of the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing countries (OPEC+), ministers decided to increase crude oil production by 648,000 barrels in July and August 2022. / day, increasing the production rate by about 50% compared with the production increase plan in April. Although OPEC has decided to increase the number of planned production increases, in terms of timing, the increase will be distributed proportionally among member countries as usual. Production quotas will still be raised, taking into account countries such as Angola, Nigeria and Russia that have failed to increase production. This could mean that the actual increase in output will be lower than the official data, which has dispelled fears of a sharp increase in OPEC production, and oil prices have risen sharply in the first time after the meeting. Shortly after the meeting, the U.S. EIA inventory data exceeded expectations again, and crude oil inventories fell by 5.068 million barrels, far exceeding market expectations. The peak consumption season is coming, which makes the supply tightness worry to dominate the market again, and oil prices quickly recovered lost ground and resumed a sharp rise.
The core factor in OPEC's plan to increase production this time is the change in Saudi Arabia's attitude. Relations between the two countries have improved amid reports that several senior U.S. delegations, including the White House Middle East policy coordinator and the White House energy envoy, have visited Saudi Arabia in recent weeks. Saudi Arabia has agreed to change its stance to stabilize oil prices as part of a settlement with the Biden administration, people familiar with the matter said. Saudi Arabia also assured that if a supply crunch hits the oil market, it will eventually respond by raising production. Although Saudi Arabia keeps saying that the oil market should not be affected by politics, in fact, judging from the interest game between Saudi Arabia and the United States, the crude oil market is full of political attributes, "Saudi Arabia is aware of these risks, and losing control of oil prices is not in line with their interests,” said a person familiar with Saudi thinking. With the United States begging it to increase production to ease supply constraints, there is news that there is "a lot of pressure" on Biden's side. The mid-term elections in November are looming as U.S. gasoline prices soar to record levels. Real pressure is forcing Biden to soften his stance, reach a compromise with Saudi Arabia, and increase oil production. In addition, "saving points" for the mid-term elections and promoting the normalization of relations between Israel and Saudi Arabia are also important issues for Biden's "compromise" trip. The White House welcomed the decision at OPEC's monthly meeting in June, praising Saudi Arabia's role in OPEC+ reaching consensus and boosting output. Taking into account the production capacity constraints of various countries, Saudi Arabia will also consider increasing production appropriately without putting too much pressure on oil prices in exchange for the United States' guarantee of its national interests. Saudi Arabia is expected to be a major winner of this production increase. .
Russia also expressed support for OPEC+’s decision to increase production by 648,000 barrels per day in July and August, and considered it necessary. Russian Deputy Prime Minister Novak said there is no doubt that this is the right decision to balance market supply and demand; Novak also emphasized that the EU's import ban on Russian seaborne crude oil and petroleum products will take 6-8 months to be implemented, during which time the market will rebalance and Russian crude oil and refined oil will flow to new markets; there are data showing Russian exports Resilience remains. Analysts say the rise in offshore crude inventories is because more and more crude is going further afield — particularly in Asia. Before the Russo-Ukrainian war, more Russian crude was shipped to nearby destinations in Northwest Europe. Novak said that it is important for OPEC+ to continue to cooperate. The OPEC+ agreement is valid until the end of the year, and the agreement retains Russia's core position in the organization. This decision will help balance the global oil market.
Overall assessment The high fever of the oil market has not improved investors' psychological expectations after OPEC's plan to increase production. The cracking profits of refined oil products in the United States and Europe continue to hit record highs. Against this background, oil prices also rebounded strongly during the Dragon Boat Festival holiday in my country. , which rose nearly 10 US dollars from the low on Thursday, and continued to break through the high in 2 months. Until there is no negative factor in demand in the peak season of consumption, it is difficult to see the momentum of weak oil prices for the time being, especially the boots that investors are worried about after the OPEC meeting. After landing, we will maintain strong expectations for oil prices in the short term. In the later stage, we should pay attention to the increasing pressure on the economy after oil prices exceed US$120. This will impact the market again from the macro level. This game process is expected to continue. Pay attention to the rhythm.
Article source: Energy Research and Development Center
Bonus rebate to help investors grow in the trading world!
Or try Free Demo Trading
