Crude oil prices “rose first and then fell” last week. At the beginning of the week, vaccine news pushed up oil prices sharply. Later, the IEA, EIA, and OPEC respectively lowered their demand expectations for the crude oil market. Market sentiment gradually returned to rationality, and oil prices oscillated back. In the future, the market will continue to wait for the final news on the US election and the progress of the global epidemic. These two news are still important factors affecting the current trend of oil prices. It is expected that oil prices will continue to maintain range oscillation in the short term.
Is the global epidemic going out of control?
Is the global epidemic going out of control? This is one of the topics of greatest concern to the global financial market. Judging from the current situation, although countries have re-adopted control measures, the overall control effect is very average. From a global perspective, as of Friday, the number of new confirmed cases of the global epidemic in a single day exceeded 630,000 per day, the cumulative number of confirmed cases has exceeded 53 million, and the cumulative death toll is close to 1.3 million. You know, the number of new cases in a single day a month ago was only 310,000. The number of confirmed cases in a single day has doubled, and the speed of spread has exceeded our imagination. As the temperature gets colder and the existing confirmed base expands unreasonably, will we have to face a situation where more than 1 million new people per day will be added in a single day in the future? If this is the case, then there is no doubt that the global epidemic is completely out of control, and it is not ruled out that more stringent blockade measures will be introduced around the world.
From a regional perspective, the high-risk areas of the epidemic are located in Europe and the Americas. As the temperature rises, the spread rate in Africa has been suppressed, and Asia has remained relatively stable. Looking at specific data, the number of newly diagnosed people in the Americas in a single day reached 237,000, compared with 85,000 in the same period last month, an increase of 179%; the number of newly diagnosed people in Europe in a single day reached 282,000, compared with 85,000 in the same period last month. 117,000 people, an increase of 141%; the number of new confirmed cases in Asia in a single day was 97,000, compared with 90,000 in the same period last month, with little change; the number of new confirmed cases in a single day in Africa was 15,000, and the overall number of confirmed cases Not too high.
From the perspective of several key countries, after the United States experienced the presidential election, the development of the epidemic has accelerated significantly. A large number of people poured into the streets to vote, causing the epidemic to spread again. Currently, the United States The number of new confirmed cases in a single day has reached 165,000, compared with 46,000 in the same period last month, an increase of 259%. The spread of the epidemic in the United States has shown obvious signs of accelerating recently. The epidemic control situation in the UK is also quite bad. Currently, the number of new cases in the UK in a single day has reached 34,000, compared with 14,000 in the same period last month, an increase of 142%. Although the British Prime Minister has announced that it has entered the second round of lockdown, It seems that the control effect is average. There are reports that Europe has missed the opportunity to control the epidemic early. Now the people are tired and no longer pay attention to government measures, which will lead to a vicious cycle in Europe where the epidemic continues to get out of control.
Since the end of last month, three major European countries, Germany, France, and the United Kingdom, have announced nationwide lockdowns for one month. Spain, Greece, Italy, the Netherlands, the Czech Republic, and other countries have also introduced partial lockdown measures. If the next global epidemic outbreak corresponds to more country blockades, then there is no doubt that the demand for crude oil will be worse than predicted by the three major reports. Unless the vaccine can be quickly popularized in a short period of time, it is currently unlikely. The market still needs macro water and supply-side support.
On the issue of vaccines, the American pharmaceutical giant Pfizer announced on its official website on Monday that its mRNA COVID-19 candidate vaccine BNT162b2, developed in collaboration with German Biotech, has been used in participants who have not been infected with the COVID-19 virus. Proven over 90% effectiveness, better than expected and well above the 50% required by the U.S. Food and Drug Administration. Pfizer said it plans to submit an emergency use authorization to the U.S. FDA in November and also expects to produce 50 million doses of vaccine in 2020 and up to 1.3 billion doses in 2021.
The current problem is that it will still take a long time from vaccine research and development to full popularization. There is currently no precedent for the commercialization of mRNA vaccines in the world, and the technology, production process, and logistics still need to be further verified. Even if the third phase of trials has been completed, it will still be a huge challenge to popularize it globally. Therefore, we must not be too optimistic in the short term when it comes to vaccines.
Three major institutions lowered demand expectations
Last week, the three major crude oil reports of EIA/IEA/OPEC were released, and all three major reports were downgraded. The crude oil forecast for 2021 has been lowered. The main reason is that the fermentation of the epidemic has had a huge impact on demand. Continued blockade may make the demand that was originally difficult to recover slip into the abyss again. Therefore, the market’s pricing of demand is also slowly reflected in prices. among.
(1) EIA monthly report
The EIA monthly report predicts that U.S. crude oil demand growth will be 1.69 million barrels per day in 2021, which was previously expectedto 1.74 million barrels per day, down 50,000 barrels per day; the 2021 global crude oil demand growth forecast is adjusted to 5.89 million barrels per day, from 6.25 million barrels per day, down 360,000 barrels per day; The crude oil demand growth forecast is adjusted to -8.61 million barrels per day, from -8.62 million barrels per day previously. While lowering the demand forecast, the EIA monthly report also lowered the demand forecast for next year. The EIA lowered its Brent price forecast for 2021 to $46.59 from 47.07 and lowered its WTI forecast to $44.24 from $44.72.
From the perspective of the supply and demand balance sheet, next year’s EIA is expected to show a slight supply shortage throughout the year, and only maintain a balance between supply and demand in some months. In this case, it is difficult for the spot side to promote the futures side. upward, so in the absence of rapid growth in demand, crude oil prices in 2021 are likely to maintain a wide range of oscillations.
From the perspective of global energy consumption, even though the demand in 2021 has increased significantly compared with 2020, it has still not returned to the previous level compared with 2018/2019. EIA predicts that liquid energy consumption will decline by 8.6 million barrels per day in 2020 and will increase by 5.9 million barrels per day in 2021. The main driving force for growth will come from demand growth in the United States and China. Therefore, we can also see that the EIA data in this period is relatively pessimistic, at least there is no sign of improvement in fundamentals.
(2) IEA Monthly Report
The IEA report also expressed concerns about the decline in demand, and the IEA’s response to last week’s vaccine boosting prices. I also poured a basin of cold water on it. The IEA said that unless fundamental factors change, the oil market will be slow to restore balance. Global oil demand will not be significantly boosted by the advent of the new crown vaccine until later next year. Before the vaccine is fully popularized, crude oil prices will Still no conditions for a sharp upward move are in sight.
The IEA said in its monthly report. “It is still too early to understand how and when vaccines will allow life to return to normal. For now, our forecasts do not foresee a significant impact in the first half of 2021, with poor demand prospects and rising production in some countries unable to Oil prices provide strong support.” The IEA monthly report pointed out that although oil demand will increase by 5.8 million barrels per day in 2021 to 97.1 million barrels per day, it will still be 3 million barrels per day lower than the pre-epidemic level in 2019; in view of the new crown epidemic in Europe and the United States To heat up, the IEA lowered its forecast for global oil demand in 2020 by 400,000 barrels per day.
(3) OPEC monthly report
OPEC monthly report lowered the oil demand forecast for the fourth quarter by 960,000 barrels per day, even with the use of vaccines, in 2021 The impact of the epidemic in 2020 will continue. Global crude oil demand is expected to be 90.01 million barrels per day in 2020, compared with the previous value of 90.29 million barrels. The global crude oil demand forecast for 2021 will be reduced by 600,000 barrels per day. The recovery of oil demand will be seriously hindered. The sluggish demand for transportation and industrial fuels will continue until mid-2021, with oil demand forecast to grow by 6.25 million barrels per day in 2021 (previous forecast of 6.54 million barrels per day), and world oil demand in 2020 forecast to decrease by 9.75 million barrels per day ( The previous forecast was for a decrease of 9.47 million barrels per day).
In OPEC’s demand forecast for next year, global crude oil demand will increase by 6.25 million barrels per day, of which demand from OECD countries will increase by 2.94 million barrels per day, and demand from non-OECD countries will increase by 3.31 million barrels. /day. China and the United States are the largest increases in global demand. U.S. crude oil demand is expected to increase by 1.34 million barrels per day, and China’s crude oil demand will increase by 1.1 million barrels per day. Although demand from other countries and regions has increased, the overall change range Not very big.
We can also see from the three major reports that even if the vaccine spreads faster than expected, the recovery process will be slow for the demand side. At least until the first half of next year, the epidemic will still plague the recovery of demand. . Therefore, we have also seen that crude oil prices have recently fallen sharply after the vaccine stimulus subsided. Next, crude oil prices will still return to the oscillating market, waiting for further fermentation of market variables.
For future crude oil prices, we expect that Brent prices will most likely maintain a range of US$40/barrel to US$46/barrel. If the market Because the impact of sentiment falls below US$40/barrel, strategic bottom-hunting investors can still actively make plans; if crude oil prices strongly exceed US$46/barrel, or even return to US$50/barrel, without demand-side support, , the foundation of oil prices will be very unstable, so it is not recommended to pursue higher prices. </p
