According to news on January 6, Beijing time, crude oil futures closed sharply higher as the Organization of the Petroleum Exporting Countries and its allies reached an agreement to curb production starting in February and Saudi Arabia voluntarily cut production significantly. New York crude oil topped $50 for the first time since February 2020.
West Texas Intermediate crude oil for February delivery on the New York Mercantile Exchange rose $2.31 to close at $49.93 per barrel, an increase of nearly 4.9%. It had previously risen to $50.20/barrel. On the ICE European futures market, global benchmark Brent crude oil prices rose $2.51, or 4.9%, to $53.60 a barrel in March. Both New York and Brent crude prices reached their highest levels since February 2020, according to the most active contracts.
Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said at a press conference that Saudi Arabia is willing to voluntarily cut production by another 1 million barrels per day. This means that production fell to 8.125 million barrels from February 1 to the end of March. This means that Saudi Arabia will bear a greater burden of oil production cuts in the next two months because Russia and Kazakhstan are allowed to increase production by 75,000 barrels per day.
OPEC+ voted in December last year to relax daily production limits by 500,000 barrels to 7.2 million barrels from January 1 next year, and then meet monthly to reassess market demand. . This comes after producers failed to make a decision on production cuts on Monday, leading to further talks on Tuesday.
Bjornar Tonhaugen, Rystad Energy’s head of oil markets, said in emailed comments: “Russia and Kazakhstan managed to increase production in February and March, while other OPEC members It has to be endured.” He said: “Saudi Arabia’s offer of compensation and voluntary production cuts has not taken an official form. It may be a vague commitment and may change in practice.”
Meanwhile, Tonhaugen said that “besides OPEC+, the oil market has found a helping hand in the Middle East as tensions rise again there.” Separately, Iran started trading at a site on Monday Underground facilities enrich uranium up to 20% and a South Korean-flagged oil tanker was seized in the Strait of Hormuz. He said: “Iran’s seizure of an oil tanker has once again destabilized the region and has once again raised questions about the reliability of the Gulf’s maritime oil transport routes. If the situation does not de-escalate quickly, oil prices will benefit from this unpredictability.” ”
Commerzbank analysts wrote in a report: “Iran’s decision to continue its uranium enrichment program may rule out for the market the near-term lifting of U.S. President-elect Joe Biden’s Any possibility of sanctions, which also means that Iran will not return to the export market in the near future.”
Back on the New York Mercantile Exchange, refined oil prices rose sharply along with oil prices. February gasoline rose 5.8% to $1.4521 a gallon and February heating oil rose 3.9% to $1.5189 a gallon.
The U.S. Energy Information Administration will release weekly data on U.S. oil supplies on Wednesday. Analysts at IHS Markit expect crude supply to fall by 1.2 million barrels in the week ending January 1. They also expect gasoline inventories to rise by 1.4 million barrels and distillate inventories to rise by 2.2 million barrels.
Natural gas futures rose strongly on Tuesday as forecasts of cooler weather in parts of the United States could boost demand for the heating fuel. February natural gas rose 4.84% to $2.702/MMBtu, after rising nearly 1.7% on Monday.
Optimistic about bullish opportunities, institutions are “hoarding oil” to rise
Crude oil It is quietly becoming the “hot potato” in the eyes of institutions.
Data show that since October 2020, international crude oil futures positions have increased by approximately 20%. After precious metals, ferrous metals, and agricultural products surged vigorously in 2020, institutions predict that crude oil may take over the banner of the commodity bull market in 2021 and become the main bullish product.
The “money-attracting” effect is significant
Since October 2020, crude oil futures have had a significant “gold-attracting” effect. Wenhua Finance data shows that Brent crude oil futures positions have increased from 1.66 million lots in early October 2020 to the current level of about 1.95 million lots, an increase of approximately 17.4%; US crude oil futures positions have increased from 1.41 million lots to 1.73 million lots. Around 22.7%.
During the same period, the two major futures varieties also achieved considerable gains. Data shows that in the fourth quarter of 2020, the main Brent and U.S. crude oil futures contracts rose by 22.79% and 21.48% respectively.
As for the funds participating in this round of rebound, some market participants analyzed that bank funds are the “largest part” of this round of crude oil investment. crocodile”. Standing at the starting point of 2021, the allocation strategy has prompted natural long investors such as banks to buy crude oil futures. Some investors have also passively joined the bullish camp of crude oil futures in the process of buying commodity indexes.
Some traders predict that the purchase volume from banks should be more than 100 million barrels to be able to meet the capital flow and index balance needs. According to overseas media reports, some authoritative institutions are bullish on oil prices in 2021. Yusuf Shamari, CEO of CMarkits, a London-based energy industry analysis agency, wrote that with the launch of vaccination globally, economic recovery is more certain, and many traders expect oil demand to increase in 2021. Bullish sentiment prevails in the market.
Institutional Views�Oil prices
“Compared with market expectations, non-ferrous metal prices have reflected expectations, and there is a large expectation gap between crude oil and gold. , agricultural products are unanimously bullish.” CICC recently pointed out in a research report that crude oil prices still have the potential to rise.
International investment banks are more bullish on crude oil. Entering 2021, many international investment institutions have released strategy reports, and many institutions are optimistic about the performance of oil prices in 2021. Goldman Sachs pointed out in the “Top Ten Market Themes in 2021” report that the three major factors of structural investment and insufficient supply, macro-driven forces and social policy-driven demand will cause commodities represented by crude oil to start a structural bull market.
“Crude oil is the king of commodities. The structural bull market of commodities includes crude oil. The main logic of institutions is to be bullish on oil prices. It can be classified into two points. First, vaccines promote global economic recovery, thereby driving the year-on-year growth rate of crude oil demand from negative to positive. Under the logic that demand growth determines the increase in oil prices, institutions infer that oil prices in 2021 will be in a bull market; second, low Oil prices have restricted upstream exploration and development expenditures, resulting in insufficient crude oil supply. During the rapid recovery of demand, supply cannot keep up with demand, and the gap between supply and demand widens, thus driving up oil prices.” Li Lei, senior energy analyst at Melya Futures explained to reporters.
Founder mid-term futures analyst Sui Xiaoying told reporters that the vaccine is expected to be gradually put into use in 2021, which will slow down the impact of the epidemic on the market. The impact of the epidemic, the global economic recovery and the weakening of the US dollar are not expected to change, and the overall market risk appetite will further rebound; with oil-producing countries reducing production and crude oil demand recovering, the global crude oil market is expected to continue destocking. Therefore, both macro logic and crude oil supply and demand logic support the upward movement of oil prices. However, the uncertainty of the epidemic and the difference between the expected effect of the vaccine after large-scale use are still major risk points, which may inhibit the upward movement of oil prices.
Sui Xiaoying believes that the focus of crude oil prices in 2021 will further rise, and at the same time, the valuation of domestic SC crude oil futures is expected to increase with the domestic As inventory pressure eases, it will rise, thereby narrowing the price difference with external crude oil. It is expected that the price fluctuation ranges of WTI crude oil, Brent crude oil and SC crude oil futures throughout the year will be between 40-60 US dollars/barrel, 43-65 US dollars/barrel and 270-400 yuan/barrel. She suggested that under the background that the overall direction of crude oil is expected to be upward, it is recommended to focus on long-term thinking in operation. You can hold long orders in the medium and long term, and go long at the correction low in the short term. </p
