Market News The increase in EIA crude oil inventories exceeded expectations, and the U.S. oil rose slightly in the short-term. After the U.S. dumped its reserves, the market ushered in a new round of gaming
The increase in EIA crude oil inventories exceeded expectations, and the U.S. oil rose slightly in the short-term. After the U.S. dumped its reserves, the market ushered in a new round of gaming
In the New York session on November 24, GMT+8 23:30, the data released by the US EIA showed that as of November 19, the US commercial crude oil inventories excluding strategic reserves increased more than expected, and refined oil inventories and gasoline inventories fell both Exceeded expectations. U.S. crude oil prices rose slightly by $0.3 in short-term after EIA data was released
2021-11-25
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Wednesday (November 24) New York session, GMT+8 23:30, data released by the U.S. EIA showed that as of the week of November 19, the U.S. commercial crude oil inventories excluding strategic reserves increased more than expected, refined oil inventories and gasoline Inventories fell more than expected. After the release of the EIA data, US crude oil prices rose slightly by $0.3 in a short-term. U.S. President Biden sold crude oil reserves to keep oil prices down, and at the same time the U.S. released news of a ban on crude oil exports. However, OPEC may adjust its current supply plan in response to the US dumping of reserves.
Specific data show that the US EIA crude oil inventory changes in the week ending November 19 actually announced an increase of 1.017 million barrels, which is expected to decrease by 1.8 million barrels, and the previous value decreased by 2.101 million barrels.
In addition, the U.S. EIA gasoline inventories actually announced a decrease of 603 million barrels for the week ending November 19, and an expected decrease of 400,000 barrels, a decrease of 707,000 barrels from the previous value; the U.S. EIA refined oil inventory actually announced a decrease of 1,968,800 barrels for the week ending November 19 Barrels, it is expected to decrease by 1.05 million barrels, and the previous value will decrease by 824,000 barrels.
The EIA report shows that last week, US domestic crude oil production increased by 100,000 barrels to 11.5 million barrels per day. The four-week average supply of US crude oil products was 20.667 million barrels per day, an increase of 7% over the same period last year. US crude oil exports fell by 1.021 million barrels per day to 2.605 million barrels per day last week.
The EIA report shows that, in addition to the strategic reserves, commercial crude oil imported 6.436 million barrels per day last week, an increase of 245,000 barrels per day from the previous week. Commercial crude oil inventories excluding strategic reserves increased by 1.017 million barrels to 434 million barrels, an increase of 0.2%.
The EIA report shows that US Strategic Petroleum Reserve (SPR) inventories have fallen to their lowest level since June 2003. US gasoline inventories fell last week to their lowest level since November 2017.
U.S. crude oil price 5 minutes chart display
The US government announced on the 23rd that it would unite with multiple major oil-consuming countries to release crude oil reserves in order to cool oil prices, but international oil prices rose instead of falling.
Market participants believe that the release of crude oil reserves is unlikely to have a sustained impact on oil prices. The significant decline in international oil prices in the previous trading days reflects the market's early digestion of this news, and the specific measures announced by the United States that day were not as strong as market expectations.
Recently, the price of gasoline in the United States has risen to a seven-year high, and domestic calls for the release of strategic oil reserves to stabilize oil prices have continued to rise. The White House announced on the 23rd that the U.S. Department of Energy will release 50 million barrels of crude oil from the Strategic Petroleum Reserve to alleviate the mismatch between oil supply and demand and reduce oil prices when the economy recovers from the new crown epidemic.
The U.S. Department of Energy stated that the 50 million barrels of crude oil will be put on the market as early as mid-to-late December this year, of which 18 million barrels have been approved by Congress and will be sold directly, and the other 32 million barrels are short-term exchanges. They will be agreed in 2022 after the oil price stabilizes. Return the strategic oil reserve by 2024.
Helima Croft, head of global commodity strategy at Royal Bank of Canada Capital Markets, predicts that in view of India’s announced plans to release 5 million barrels of crude oil reserves, plus the release of Japan, South Korea, the United Kingdom and other countries, this time The size of crude oil reserves released by multiple countries is expected to be 65 million barrels to 70 million barrels.
Data show that the current strategic crude oil reserve of the United States is slightly more than 600 million barrels, while the global average daily oil demand is about 100 million barrels. Rob Haworth, investment strategist at U.S. Bank Wealth Management, said that the total size of the crude oil reserves released by the United States is higher than previous market expectations, but a large part of it is short-term exchange and needs to be returned, which to a certain extent makes this The influence of the policy has been discounted.
Rebecca Babin, a senior energy trader at CIBC Private Wealth Management, said that the plan to release crude oil reserves has been widely known by the market before and has therefore been reflected in market prices. And because traders locked in profits before the end of the year, the positions of crude oil futures varieties have decreased significantly in the past few weeks, which has also reduced the intensity of the market's response to this news.
Phil Flynn, senior market analyst at the US Price Futures Group, believes that the release of crude oil reserves will only have a short-term impact on oil prices. Analysts believe that the trend of the epidemic in the later period and whether the oil-producing countries will make a policy response to the release of crude oil reserves will determine the next trend of oil prices.
Haworth said that the impact of the release of strategic crude oil reserves will be moderate, and the market will continue to focus on the demand trend. Data from the US Department of Transportation shows that US airline passenger traffic data will remain strong. He believes that the rebound in the number of new crown virus infections and the re-implementation of epidemic bans in Europe are unlikely to significantly affect market demand. The recent increase in the number of new crown infections has not had a sustained impact on oil demand.
Haworth said that if the joint release of crude oil reserves lowers oil prices below last week’s low, OPEC and non-OPEC oil-producing countries are likely to consider taking action on this, but based on the market performance that day, OPEC and non-OPEC oil-producing countries may Take a wait-and-see attitude.
Croft said that although OPEC and non-OPEC oil-producing countries are still expected to maintain the current output policy at the regular monthly meeting next week, it cannot be completely ruled out that Saudi Arabia will promote the reduction of the monthly increase in current output in response. The practice of jointly releasing crude oil reserves by consumer countries. However, due to concerns about political pressure from the United States, many Gulf countries that have close ties to the United States are likely to oppose this action.
Austrian JBC Energy Consulting said that OPEC retained the option of suspending increased supply in the initial production agreement. In the case of concerns about the decline in oil demand, major oil-producing countries may postpone increasing the supply of crude oil. Unless OPEC and non-OPEC oil-producing countries completely cancel their plans to gradually increase supply, oil prices are expected to gradually fall next year.
As US gasoline prices continue to rise, US Secretary of Energy Jennifer Granholm criticized the US oil industry on Tuesday for only taking advantage of high oil prices to make money for stock buybacks instead of trying to resume production.
US Secretary of Energy Granholm said that President Biden’s actions would cause oil prices to fall by 10%. He said that energy prices are too high, and low-income households are the most hurt by rising energy prices. The government is looking for all tools to help protect households from rising energy prices. "The situation shows that we must stop relying on one energy source."
The US Deputy Secretary of Energy Turk said that the release of the strategic oil reserve will reduce gasoline prices in the near future. The oil reserve will not be released all at once. It will be completed within a period of time. President Biden has other means to reduce energy costs. . Turk said that the number of oil rigs (higher ones) in operation in the United States has been reduced by 250, but the United States is working hard to increase the output of energy companies.
When White House Press Secretary Jane Psaki was asked whether the White House would release further strategic oil reserves, she said that these options were not ruled out, and President Biden was worried about all price increases.
A reporter asked Granholm: In the United States, we produce 11 million barrels of oil a day, which is down from 12 million barrels in 2019... Why has domestic production not recovered in a way that can lower prices?
Glenholm replied: Compared with before the pandemic, we have 250 fewer oil rigs in operation today. However, the oil and gas industry has 23 million acres of public land and offshore leases. At the same time, the energy industry is making huge profits and has returned to levels before the pandemic began. She went on to say: So (oil companies) use this opportunity to make profits and be able to repurchase shares.
Granholm seems to link the oil company's problems with the increase in gasoline prices, and points the finger at some of the practices these companies have taken to save money. She said these practices include not rehiring people who were fired during the new crown epidemic and not restarting certain oil rigs.
The rise in oil prices coincided with one of the busiest holidays in the United States. When millions of Americans were preparing to drive for Thanksgiving, gasoline prices in many places hit record highs. According to the American Automobile Association, the current average price of gasoline in the United States is $3.40 per gallon, while the average price a year ago was $2.10 per gallon.
Although US President Biden announced on Tuesday that it will release 50 million barrels of strategic oil reserves to reduce oil prices. But Granholm believes that oil companies should also do their part to help. She said: We hope to encourage oil companies to increase supply. We want to increase supplies in the United States and around the world so that we can reduce pressure on oil prices.
On Tuesday, after US government officials announced that they would release 50 million barrels of strategic oil reserves, international oil prices still rose significantly. This seems to prove that Goldman Sachs' previous judgment was correct.
Two months ago, when the idea of dumping reserves first surfaced, Goldman Sachs stated that the US strategic oil reserves sold up to 60 million barrels, and the dumping of reserves would increase oil prices. Then, less than a week ago, oil prices plummeted, Goldman Sachs said. He also said that dumping of reserves has been priced by the market. If the United States releases oil reserves, it will push up oil prices next year.
Just like the performance of oil prices, after the smaller-than-expected reserve dumping scale eventually turned short-selling rumors into "buy news" frenzy, Brent crude oil prices rose sharply.
Goldman Sachs’s commodity team has been very optimistic about oil prices for most of this year. It expects that oil prices will rise to $90 per barrel by the end of the year and maintain a higher level in the next few years; even if Biden says it will use strategic oil reserves, Goldman Sachs is still not worried about the plunge in oil prices.
On Tuesday, Goldman Sachs’ commodity master Damien Courvalin wrote in a report: The US government announced today that it will release 50 million barrels of oil reserves, and countries such as South Korea, Japan, India, and the United Kingdom can release up to 30 million barrels, with a total scale of about 7000- The release of 80 million barrels is less than the market expectation of more than 100 million barrels. Due to the interchangeability of most crude oil, this means that the net increase in oil supply will be smaller during 2022-2023.
As Courvalin pointed out, the scale of crude oil released by dumping reserves is only a drop in the ocean compared to the current annual consumption of up to 2 million barrels per day.
According to Courvalin's pricing model, the drop in oil prices caused by the dumping of reserves will be less than US$2/barrel, which is significantly lower than the US$8/barrel sell-off that has occurred since the end of October. Therefore, Courvalin believes that the current Brent crude oil price of US$82/barrel has in fact not only included the reserve price, but also reflects the market’s expectation that the global oil demand will suffer an additional 1.5 million barrels/day in the next three months. Shock expectations. For example, last winter's new crown epidemic (without vaccinations) only reduced EU oil demand by 1 million barrels per day.
There is no doubt that the Goldman Sachs strategist believes that these are "excessive concerns about the next three months. Due to the decline in trading activities at the end of the year, the recent sell-off has exceeded the fundamentals."
In addition, some analysts believe that the decline in oil prices caused by the dumping of reserves was offset by the lack of progress in the Iranian negotiations. It is certain that the resumption of negotiations on November 29 (next Monday) will provide some clues to the possible timetable for reaching an agreement. However, Goldman Sachs’ assumptions about lifting 60 million barrels of Iran’s floating storage facilities in February next year and lifting sanctions in April are obviously too optimistic.
In addition, as a retaliation for dumping reserves, OPEC can easily consider stopping the increase in production to offset the adverse impact of the decline in oil prices on the recovery of global oil capital expenditures.
Faced with the "anti-OPEC+ alliance" formed by the United States and Japan, South Korea, India, and the United Kingdom and other major oil-consuming countries, OPEC+ oil-producing countries will certainly not sit idly by.
Oil strategist Julian Lee believes that OPEC+ oil-producing countries group will abandon at least two months of production increase plans to offset the impact of the United States-led multi-national coordinated release of strategic petroleum reserves (SPR) plans. According to previous plans, OPEC+ will increase crude oil production by 400,000 barrels per day in January and February.
The United States will release 50 million barrels of crude oil from the Strategic Petroleum Reserve, Japan plans to release 4.2 million barrels, the United Kingdom will contribute 1.5 million barrels, and other countries are also planning. Bloomberg estimates that about 60 million barrels of crude oil will be released from the strategic oil reserve by the end of March.
In this regard, in an interview on November 24, David Turk, the US Deputy Secretary of Energy, believes that the release of the Strategic Petroleum Reserve (SPR) will reduce gasoline prices in the near future. He said: The Ministry of Energy announced the release of SPR to help solve the current problem of high oil prices. We expect oil prices to slow down and gradually decline starting from 2022.
This is the first time in ten years that a multi-country coordinated release of oil reserves. The last time a similar collaboration occurred in 2011, when the United States and 27 other countries agreed to release a total of 60 million barrels of strategic reserves to make up for approximately 1.4 lost due to the three-month civil war in Libya. Billion barrels of oil.
Louise Dickson, senior oil market analyst at Rystad Energy, pointed out that the move marks the official emergence of the anti-OPEC+ alliance: a group of the largest oil consumers have taken supply-side dynamics in their own hands during the release of unconventional and unprecedented strategic oil reserves. To create artificial supply-side loosening on a global scale and negatively impact oil prices. This aim is to bring the economic recovery after the epidemic back on track, especially in the context of increasing inflation in the macro environment.
The joint dumping of reserves may cause the United States to oppose OPEC+, including its old ally Saudi Arabia. For a long time, the relationship with Saudi Arabia has been the traditional cornerstone of US relations in the Middle East.
Helima Croft, chief commodity strategist at RBC Capital Markets, once said: This move may increase the stakes in this oil poker game and may bring new tensions to the bilateral relations between Washington and Riyadh. "
OPEC+ said that given the current market conditions, it is unreasonable for its largest customer to release millions of barrels of oil from its inventory, and the organization may have to reconsider its plan to increase oil production when it meets next week.
Previously, the latest prospects of the International Energy Agency, the Organization of Petroleum Exporting Countries and the U.S. Energy Information Administration all showed that starting from 2022, the oil market will soon end in short supply and turn into a healthy oversupply state. In this context, the Biden administration's massive SPR placement into the market at this time has undoubtedly brought greater risks to OPEC+ crude oil producers led by Saudi Arabia and Russia.
On Monday, a representative of the International Energy Forum headquartered in Riyadh said: If (the United States, Japan, India and many other countries) release national strategic oil reserves, OPEC+ may adjust its oil production plan.
After Biden takes office, he may modify the diplomatic relations between the United States and the three OPEC member states. The three countries are Saudi Arabia, the de facto leader of OPEC, the sanctioned countries Iran and Venezuela, and the major non-OPEC oil producer Russia. , Russia is now the leader of the "OPEC+" alliance between non-members and OPEC.
Rising energy prices threaten the recovery of the U.S. economy and become the top issue that Biden needs to solve. Faced with high oil prices, the White House is still considering the idea of "banning the export of crude oil to reduce oil prices" proposed by House Democrats.
According to reports, on Monday, nine Democrats headed by Khanna jointly signed a letter to the White House urging the Biden administration to ban U.S. crude oil exports. The White House said it is carefully considering it. But some industry analysts and economists hold the opposite view, and they believe that doing so may be counterproductive.
After urging OPEC to increase production hopelessly, Biden took out the other tool of the government toolbox-Strategic Reserve Petroleum (SPR), and jointly dumped reserves with major crude oil consumers.
Even supporters of SPR admit that this is not a long-term solution and that the amount of strategic oil reserves is limited. In the case of economic recovery, at the same time OPEC, the United States and other major producing countries are weak in supply, strategic dumping of reserves cannot completely solve the imbalance between supply and demand caused by the surge in demand.
Khanna said: Strategic dumping of reserves is not a panacea. We must do our best to reduce the cost of living of the American working class and control the expansion.
People have different opinions on the "ban on crude oil export" and hold their own opinions. Khanna believes that this can cause downward pressure on gasoline prices, and some industry analysts believe that this may be counterproductive, effective in the short term, but will fail in the long term.
In fact, the United States has implemented a crude oil export ban. In 2015, the US Congress approved a bill to lift the 40-year ban on crude oil exports from the United States. Since then, US crude oil exports have exceeded 3 million barrels per day, surpassing the output of major OPEC members such as Kuwait and Iran.
According to reports, some experts warned that U.S. refineries can only process crude oil that is injected into the U.S. shale basin. Intercepting supplies in the U.S. may cause the prices of several types of crude oil to plummet, while gasoline prices will still rise.
Reed Blakemor, deputy director of the Atlantic Council's Global Energy Center, believes that Houston residents will suffer serious losses and that oil prices will only be eased in the short term.
Zandy, chief economist at Moody's Analytics, said whether this can significantly reduce gasoline prices? The price of gasoline depends to a large extent on the price of global oil, not the price of domestically produced oil. It is unclear whether the US refineries can efficiently process which type of oil.
Khanna expressed doubts about the analysis of industry experts, believing that their warnings about the oil export ban were contradictory, saying that increasing domestic supply is not good for Americans, which is really bullshit.
EIA crude oil inventories increase more than expected
Specific data show that the US EIA crude oil inventory changes in the week ending November 19 actually announced an increase of 1.017 million barrels, which is expected to decrease by 1.8 million barrels, and the previous value decreased by 2.101 million barrels.
In addition, the U.S. EIA gasoline inventories actually announced a decrease of 603 million barrels for the week ending November 19, and an expected decrease of 400,000 barrels, a decrease of 707,000 barrels from the previous value; the U.S. EIA refined oil inventory actually announced a decrease of 1,968,800 barrels for the week ending November 19 Barrels, it is expected to decrease by 1.05 million barrels, and the previous value will decrease by 824,000 barrels.
The EIA report shows that last week, US domestic crude oil production increased by 100,000 barrels to 11.5 million barrels per day. The four-week average supply of US crude oil products was 20.667 million barrels per day, an increase of 7% over the same period last year. US crude oil exports fell by 1.021 million barrels per day to 2.605 million barrels per day last week.
The EIA report shows that, in addition to the strategic reserves, commercial crude oil imported 6.436 million barrels per day last week, an increase of 245,000 barrels per day from the previous week. Commercial crude oil inventories excluding strategic reserves increased by 1.017 million barrels to 434 million barrels, an increase of 0.2%.
The EIA report shows that US Strategic Petroleum Reserve (SPR) inventories have fallen to their lowest level since June 2003. US gasoline inventories fell last week to their lowest level since November 2017.
U.S. crude oil price 5 minutes chart display
The United States unites multiple countries to release crude oil reserves, and international oil prices rise instead of falling
The US government announced on the 23rd that it would unite with multiple major oil-consuming countries to release crude oil reserves in order to cool oil prices, but international oil prices rose instead of falling.
Market participants believe that the release of crude oil reserves is unlikely to have a sustained impact on oil prices. The significant decline in international oil prices in the previous trading days reflects the market's early digestion of this news, and the specific measures announced by the United States that day were not as strong as market expectations.
Recently, the price of gasoline in the United States has risen to a seven-year high, and domestic calls for the release of strategic oil reserves to stabilize oil prices have continued to rise. The White House announced on the 23rd that the U.S. Department of Energy will release 50 million barrels of crude oil from the Strategic Petroleum Reserve to alleviate the mismatch between oil supply and demand and reduce oil prices when the economy recovers from the new crown epidemic.
The U.S. Department of Energy stated that the 50 million barrels of crude oil will be put on the market as early as mid-to-late December this year, of which 18 million barrels have been approved by Congress and will be sold directly, and the other 32 million barrels are short-term exchanges. They will be agreed in 2022 after the oil price stabilizes. Return the strategic oil reserve by 2024.
Helima Croft, head of global commodity strategy at Royal Bank of Canada Capital Markets, predicts that in view of India’s announced plans to release 5 million barrels of crude oil reserves, plus the release of Japan, South Korea, the United Kingdom and other countries, this time The size of crude oil reserves released by multiple countries is expected to be 65 million barrels to 70 million barrels.
Data show that the current strategic crude oil reserve of the United States is slightly more than 600 million barrels, while the global average daily oil demand is about 100 million barrels. Rob Haworth, investment strategist at U.S. Bank Wealth Management, said that the total size of the crude oil reserves released by the United States is higher than previous market expectations, but a large part of it is short-term exchange and needs to be returned, which to a certain extent makes this The influence of the policy has been discounted.
Rebecca Babin, a senior energy trader at CIBC Private Wealth Management, said that the plan to release crude oil reserves has been widely known by the market before and has therefore been reflected in market prices. And because traders locked in profits before the end of the year, the positions of crude oil futures varieties have decreased significantly in the past few weeks, which has also reduced the intensity of the market's response to this news.
Phil Flynn, senior market analyst at the US Price Futures Group, believes that the release of crude oil reserves will only have a short-term impact on oil prices. Analysts believe that the trend of the epidemic in the later period and whether the oil-producing countries will make a policy response to the release of crude oil reserves will determine the next trend of oil prices.
Haworth said that the impact of the release of strategic crude oil reserves will be moderate, and the market will continue to focus on the demand trend. Data from the US Department of Transportation shows that US airline passenger traffic data will remain strong. He believes that the rebound in the number of new crown virus infections and the re-implementation of epidemic bans in Europe are unlikely to significantly affect market demand. The recent increase in the number of new crown infections has not had a sustained impact on oil demand.
Haworth said that if the joint release of crude oil reserves lowers oil prices below last week’s low, OPEC and non-OPEC oil-producing countries are likely to consider taking action on this, but based on the market performance that day, OPEC and non-OPEC oil-producing countries may Take a wait-and-see attitude.
Croft said that although OPEC and non-OPEC oil-producing countries are still expected to maintain the current output policy at the regular monthly meeting next week, it cannot be completely ruled out that Saudi Arabia will promote the reduction of the monthly increase in current output in response. The practice of jointly releasing crude oil reserves by consumer countries. However, due to concerns about political pressure from the United States, many Gulf countries that have close ties to the United States are likely to oppose this action.
Austrian JBC Energy Consulting said that OPEC retained the option of suspending increased supply in the initial production agreement. In the case of concerns about the decline in oil demand, major oil-producing countries may postpone increasing the supply of crude oil. Unless OPEC and non-OPEC oil-producing countries completely cancel their plans to gradually increase supply, oil prices are expected to gradually fall next year.
The US Secretary of Energy said that the Biden action would cause oil prices to fall by 10%, hoping to increase supplies around the world
As US gasoline prices continue to rise, US Secretary of Energy Jennifer Granholm criticized the US oil industry on Tuesday for only taking advantage of high oil prices to make money for stock buybacks instead of trying to resume production.
US Secretary of Energy Granholm said that President Biden’s actions would cause oil prices to fall by 10%. He said that energy prices are too high, and low-income households are the most hurt by rising energy prices. The government is looking for all tools to help protect households from rising energy prices. "The situation shows that we must stop relying on one energy source."
The US Deputy Secretary of Energy Turk said that the release of the strategic oil reserve will reduce gasoline prices in the near future. The oil reserve will not be released all at once. It will be completed within a period of time. President Biden has other means to reduce energy costs. . Turk said that the number of oil rigs (higher ones) in operation in the United States has been reduced by 250, but the United States is working hard to increase the output of energy companies.
When White House Press Secretary Jane Psaki was asked whether the White House would release further strategic oil reserves, she said that these options were not ruled out, and President Biden was worried about all price increases.
A reporter asked Granholm: In the United States, we produce 11 million barrels of oil a day, which is down from 12 million barrels in 2019... Why has domestic production not recovered in a way that can lower prices?
Glenholm replied: Compared with before the pandemic, we have 250 fewer oil rigs in operation today. However, the oil and gas industry has 23 million acres of public land and offshore leases. At the same time, the energy industry is making huge profits and has returned to levels before the pandemic began. She went on to say: So (oil companies) use this opportunity to make profits and be able to repurchase shares.
Granholm seems to link the oil company's problems with the increase in gasoline prices, and points the finger at some of the practices these companies have taken to save money. She said these practices include not rehiring people who were fired during the new crown epidemic and not restarting certain oil rigs.
The rise in oil prices coincided with one of the busiest holidays in the United States. When millions of Americans were preparing to drive for Thanksgiving, gasoline prices in many places hit record highs. According to the American Automobile Association, the current average price of gasoline in the United States is $3.40 per gallon, while the average price a year ago was $2.10 per gallon.
Although US President Biden announced on Tuesday that it will release 50 million barrels of strategic oil reserves to reduce oil prices. But Granholm believes that oil companies should also do their part to help. She said: We hope to encourage oil companies to increase supply. We want to increase supplies in the United States and around the world so that we can reduce pressure on oil prices.
Wall Street Investment Bank believes that the sell-off of US crude oil reserves is not enough to depress oil prices
On Tuesday, after US government officials announced that they would release 50 million barrels of strategic oil reserves, international oil prices still rose significantly. This seems to prove that Goldman Sachs' previous judgment was correct.
Two months ago, when the idea of dumping reserves first surfaced, Goldman Sachs stated that the US strategic oil reserves sold up to 60 million barrels, and the dumping of reserves would increase oil prices. Then, less than a week ago, oil prices plummeted, Goldman Sachs said. He also said that dumping of reserves has been priced by the market. If the United States releases oil reserves, it will push up oil prices next year.
Just like the performance of oil prices, after the smaller-than-expected reserve dumping scale eventually turned short-selling rumors into "buy news" frenzy, Brent crude oil prices rose sharply.
Goldman Sachs’s commodity team has been very optimistic about oil prices for most of this year. It expects that oil prices will rise to $90 per barrel by the end of the year and maintain a higher level in the next few years; even if Biden says it will use strategic oil reserves, Goldman Sachs is still not worried about the plunge in oil prices.
On Tuesday, Goldman Sachs’ commodity master Damien Courvalin wrote in a report: The US government announced today that it will release 50 million barrels of oil reserves, and countries such as South Korea, Japan, India, and the United Kingdom can release up to 30 million barrels, with a total scale of about 7000- The release of 80 million barrels is less than the market expectation of more than 100 million barrels. Due to the interchangeability of most crude oil, this means that the net increase in oil supply will be smaller during 2022-2023.
As Courvalin pointed out, the scale of crude oil released by dumping reserves is only a drop in the ocean compared to the current annual consumption of up to 2 million barrels per day.
According to Courvalin's pricing model, the drop in oil prices caused by the dumping of reserves will be less than US$2/barrel, which is significantly lower than the US$8/barrel sell-off that has occurred since the end of October. Therefore, Courvalin believes that the current Brent crude oil price of US$82/barrel has in fact not only included the reserve price, but also reflects the market’s expectation that the global oil demand will suffer an additional 1.5 million barrels/day in the next three months. Shock expectations. For example, last winter's new crown epidemic (without vaccinations) only reduced EU oil demand by 1 million barrels per day.
There is no doubt that the Goldman Sachs strategist believes that these are "excessive concerns about the next three months. Due to the decline in trading activities at the end of the year, the recent sell-off has exceeded the fundamentals."
In addition, some analysts believe that the decline in oil prices caused by the dumping of reserves was offset by the lack of progress in the Iranian negotiations. It is certain that the resumption of negotiations on November 29 (next Monday) will provide some clues to the possible timetable for reaching an agreement. However, Goldman Sachs’ assumptions about lifting 60 million barrels of Iran’s floating storage facilities in February next year and lifting sanctions in April are obviously too optimistic.
In addition, as a retaliation for dumping reserves, OPEC can easily consider stopping the increase in production to offset the adverse impact of the decline in oil prices on the recovery of global oil capital expenditures.
OPEC+ may consider a new production plan to deal with the dumping of U.S. reserves
Faced with the "anti-OPEC+ alliance" formed by the United States and Japan, South Korea, India, and the United Kingdom and other major oil-consuming countries, OPEC+ oil-producing countries will certainly not sit idly by.
Oil strategist Julian Lee believes that OPEC+ oil-producing countries group will abandon at least two months of production increase plans to offset the impact of the United States-led multi-national coordinated release of strategic petroleum reserves (SPR) plans. According to previous plans, OPEC+ will increase crude oil production by 400,000 barrels per day in January and February.
The United States will release 50 million barrels of crude oil from the Strategic Petroleum Reserve, Japan plans to release 4.2 million barrels, the United Kingdom will contribute 1.5 million barrels, and other countries are also planning. Bloomberg estimates that about 60 million barrels of crude oil will be released from the strategic oil reserve by the end of March.
In this regard, in an interview on November 24, David Turk, the US Deputy Secretary of Energy, believes that the release of the Strategic Petroleum Reserve (SPR) will reduce gasoline prices in the near future. He said: The Ministry of Energy announced the release of SPR to help solve the current problem of high oil prices. We expect oil prices to slow down and gradually decline starting from 2022.
This is the first time in ten years that a multi-country coordinated release of oil reserves. The last time a similar collaboration occurred in 2011, when the United States and 27 other countries agreed to release a total of 60 million barrels of strategic reserves to make up for approximately 1.4 lost due to the three-month civil war in Libya. Billion barrels of oil.
Louise Dickson, senior oil market analyst at Rystad Energy, pointed out that the move marks the official emergence of the anti-OPEC+ alliance: a group of the largest oil consumers have taken supply-side dynamics in their own hands during the release of unconventional and unprecedented strategic oil reserves. To create artificial supply-side loosening on a global scale and negatively impact oil prices. This aim is to bring the economic recovery after the epidemic back on track, especially in the context of increasing inflation in the macro environment.
The joint dumping of reserves may cause the United States to oppose OPEC+, including its old ally Saudi Arabia. For a long time, the relationship with Saudi Arabia has been the traditional cornerstone of US relations in the Middle East.
Helima Croft, chief commodity strategist at RBC Capital Markets, once said: This move may increase the stakes in this oil poker game and may bring new tensions to the bilateral relations between Washington and Riyadh. "
OPEC+ said that given the current market conditions, it is unreasonable for its largest customer to release millions of barrels of oil from its inventory, and the organization may have to reconsider its plan to increase oil production when it meets next week.
Previously, the latest prospects of the International Energy Agency, the Organization of Petroleum Exporting Countries and the U.S. Energy Information Administration all showed that starting from 2022, the oil market will soon end in short supply and turn into a healthy oversupply state. In this context, the Biden administration's massive SPR placement into the market at this time has undoubtedly brought greater risks to OPEC+ crude oil producers led by Saudi Arabia and Russia.
On Monday, a representative of the International Energy Forum headquartered in Riyadh said: If (the United States, Japan, India and many other countries) release national strategic oil reserves, OPEC+ may adjust its oil production plan.
After Biden takes office, he may modify the diplomatic relations between the United States and the three OPEC member states. The three countries are Saudi Arabia, the de facto leader of OPEC, the sanctioned countries Iran and Venezuela, and the major non-OPEC oil producer Russia. , Russia is now the leader of the "OPEC+" alliance between non-members and OPEC.
In addition to selling oil reserves, the United States is also considering banning crude oil exports
Rising energy prices threaten the recovery of the U.S. economy and become the top issue that Biden needs to solve. Faced with high oil prices, the White House is still considering the idea of "banning the export of crude oil to reduce oil prices" proposed by House Democrats.
According to reports, on Monday, nine Democrats headed by Khanna jointly signed a letter to the White House urging the Biden administration to ban U.S. crude oil exports. The White House said it is carefully considering it. But some industry analysts and economists hold the opposite view, and they believe that doing so may be counterproductive.
After urging OPEC to increase production hopelessly, Biden took out the other tool of the government toolbox-Strategic Reserve Petroleum (SPR), and jointly dumped reserves with major crude oil consumers.
Even supporters of SPR admit that this is not a long-term solution and that the amount of strategic oil reserves is limited. In the case of economic recovery, at the same time OPEC, the United States and other major producing countries are weak in supply, strategic dumping of reserves cannot completely solve the imbalance between supply and demand caused by the surge in demand.
Khanna said: Strategic dumping of reserves is not a panacea. We must do our best to reduce the cost of living of the American working class and control the expansion.
People have different opinions on the "ban on crude oil export" and hold their own opinions. Khanna believes that this can cause downward pressure on gasoline prices, and some industry analysts believe that this may be counterproductive, effective in the short term, but will fail in the long term.
In fact, the United States has implemented a crude oil export ban. In 2015, the US Congress approved a bill to lift the 40-year ban on crude oil exports from the United States. Since then, US crude oil exports have exceeded 3 million barrels per day, surpassing the output of major OPEC members such as Kuwait and Iran.
According to reports, some experts warned that U.S. refineries can only process crude oil that is injected into the U.S. shale basin. Intercepting supplies in the U.S. may cause the prices of several types of crude oil to plummet, while gasoline prices will still rise.
Reed Blakemor, deputy director of the Atlantic Council's Global Energy Center, believes that Houston residents will suffer serious losses and that oil prices will only be eased in the short term.
Zandy, chief economist at Moody's Analytics, said whether this can significantly reduce gasoline prices? The price of gasoline depends to a large extent on the price of global oil, not the price of domestically produced oil. It is unclear whether the US refineries can efficiently process which type of oil.
Khanna expressed doubts about the analysis of industry experts, believing that their warnings about the oil export ban were contradictory, saying that increasing domestic supply is not good for Americans, which is really bullshit.
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