Abstract: The improvement of the global epidemic situation, the conclusion of the US election, and the gradual implementation of fiscal stimulus measures have led to continued improvement in market risk sentiment and a renewed increase in market risk appetite. In addition, Saudi Arabia has additionally reduced production in February and March and the US heating demand has increased seasonally. To further support the oil market in the short term, the overall market supply and demand performance in the first quarter is tight, and the oil price trend is expected to be easy to rise but difficult to fall.
Macroeconomic sentiment is improving and the US dollar has staged a rebound. Recently, the global epidemic situation has improved. The number of new cases has dropped significantly after reaching a new high at the beginning of this year. The epidemic in Europe and the United States has reached a clear turning point. In addition, as As the number of vaccinations gradually increases, it is expected to have further effects on epidemic prevention and control. The dust of the U.S. election has settled, the Biden administration’s fiscal stimulus measures are gradually implemented, and the U.S. economic recovery situation continues to be optimistic. At the same time, the market generally expects that the U.S. foreign trade policy will go to extremes, Sino-U.S. trade relations are expected to improve, and the U.S.’s stance on Iran, Venezuela and other countries Sanctions may also be relaxed. Overall, the global macro situation has continued to improve recently, and market risk sentiment has recovered accordingly, which has provided further upward support for commodities such as crude oil. However, a phased rebound in the US dollar may restrain the height of the rise in oil prices.
Saudi Arabia’s voluntary additional production cuts tightened market supply. At the OPEC+ meeting in early January, Saudi Arabia announced that it would voluntarily reduce more production in February and March under the production reduction framework. 1 million barrels per day, which to a certain extent offsets the monthly production increase plan reached by OPEC+ at the end of last year to reduce production cuts by 500,000 barrels per day. This made the overall market supply tight in the first quarter. It is understood that despite the easing of OPEC production cuts, oil shipments from OPEC Persian Gulf oil-producing countries still declined in January. The largest decline came from Saudi Arabia. Ship tracking data monitored by Bloomberg showed that in January, shipments from Saudi Arabia, Total crude oil and condensate shipments from Iraq, the United Arab Emirates and Kuwait were nearly 430,000 barrels per day lower than in December, with the United Arab Emirates being the only country to increase shipments last month. However, we cannot ignore the potential increase in supply in the current market. Due to the easing of the domestic situation in Libya, the country’s crude oil production has recovered rapidly since the second half of 2020. By December 2020, the country’s crude oil production rose to 1.224 million barrels per day. , basically returned to the level before the production decline. In the second quarter of 2020, the country’s crude oil production once dropped to less than 100,000 barrels per day. In addition, after the new U.S. President Biden takes office, he intends to relax sanctions on Venezuela and Iran, which means that the crude oil supply from the two countries may return to the market, bringing a potential supply increase of 3-4 million barrels/barrel/ day.
The Northeastern United States was hit by a snowstorm, and the demand for heating oil was boosted. Home heating in the Northeastern United States is basically dominated by natural gas and heating oil. Recently, the Northeastern United States was hit by a snowstorm, and the cold The weather increases the demand for heating fuel. In the past few weeks, U.S. demand for distillates, including heating oil, has continued to grow. As of the week of January 22, U.S. demand for heating oil has increased for three consecutive weeks and rose to 4.3 million barrels per day, which is higher than that at the beginning of January. An increase of 46%. The recent snowstorm may further increase the demand for heating oil among American residents.
The strong monthly difference in crude oil reflects the tight near-end supply and demand. Recently, the monthly difference in crude oil in Europe and the United States has continued to strengthen. Currently, both show a Back structure, and the amplitude continues to deepen. The overall response is near-end. Supply and demand are tight.
Taken together, the improvement of the global epidemic situation, the settling of the dust of the US election, and the gradual implementation of fiscal stimulus measures have caused the market risk sentiment to continue to improve, and the market risk appetite has once again In addition, additional production cuts by Saudi Arabia and seasonal increases in heating demand in the United States will further support the oil market in the short term. The overall market supply and demand performance in the first quarter was tight. In the short term, oil prices will still be on the strong side. After SC crude oil breaks through the 350 pressure mark, it will open up room for growth. It is recommended to hold long orders. However, we need to be wary of the further strengthening of the US dollar that will suppress oil prices. The center of gravity of oil prices in the medium and long term will further rise. </p
