In-depth observation of Zhongyu Information
In October 2020, international crude oil futures prices Most of the time, it fluctuated in the range of 40 to 43 US dollars per barrel. The successive attacks of Atlantic hurricanes caused long-term disruptions to the U.S. Gulf Coast and offshore oil and gas production capacity. The OPEC+ production reduction agreement also continued to support oil prices. However, near the end of the month, negative news gathered on both supply and demand lines. The pressure has increased sharply. The epidemic in Europe and the United States has reached its peak after the second outbreak. The United States and many European countries have set records for the number of new confirmed cases in a single day. The rapid expansion of the epidemic has triggered market panic, and the large-scale increase in U.S. crude oil inventories and production has given There was more pressure on the market, and European and American oil prices suffered consecutive plunges, hitting a five-month low at the end of the month.
Zhongyu Information monitoring data shows that the closing price of WTI crude oil futures on the New York Mercantile Exchange on October 29, 2020, outside trading time The closing price of Brent crude oil futures on the Intercontinental Exchange on October 29 was US$37.65/barrel, a decrease of US$4.05/barrel, or 10.07%, from the closing price on September 30, 2020. The daily closing price fell by -$3.30/barrel, a decrease of 8.06%. As of now, the average price of WTI in October is US$39.73/barrel, an increase of US$0.11/barrel, or 0.27%, from the average price in September 2020, and the average price of Brent in October is US$41.72/barrel, a decrease from the average price in September 2020. US$0.16/barrel, a decrease of 0.37%.
Judging from the price curve, European and American crude oil futures prices have actually remained relatively stable for most of the time. We warned in our monthly report last month that the resurgence of the epidemic will eventually lead to a correction in oil prices. The fragile balance that oil-producing countries have managed to maintain by relying on large-scale production cuts has actually been broken. During the second phase of the production reduction agreement from July to December, , OPEC+ reduced the scale of production cuts to 7.7 million barrels per day, which actually means that there is room for growth in production, but there are many obstacles to compensating for the production cuts. Conflicts and differences within the oil-producing countries have weakened the support for oil prices from the agreed production cuts. In the continuous At the three-month OPEC+ joint ministerial supervision meeting, no targeted revision of production policy was made in response to the current oil market situation, which dampened bullish confidence.
What’s even more fatal is that Libya, which is outside the production reduction framework, will return to the oil market this month and in the short term It has rapidly increased its production, and the Atlantic hurricane attacks have failed to curb the recovery of U.S. crude oil production. The rebound in the number of shale oil drilling means that more North American shale oil and gas will return to the market, which has put great pressure on the market. In addition, Consumption support from the Asia-Pacific region is also weakening, China’s crude oil imports have begun to slow down, and as independent refinery import quotas are about to be exhausted, the probability of China continuing to maintain strong import growth has dropped significantly. Although China has promoted a large amount of crude oil imports from the United States in order to comply with the trade agreement with the United States, it has correspondingly reduced the absorption of crude oil from other regions. This trade-off is actually difficult to form further support for the oil market in terms of total volume. Currently, bearish sentiment in the market continues to accumulate. The second outbreak of the new crown epidemic in Europe and the United States has put more pressure on risk markets. The epidemic curve in the United States has risen sharply, while many European countries have re-entered strict national lockdowns. The uncertainty of the U.S. election has suppressed risk appetite, and the new round of U.S. economic rescue plans has reached a deadlock, which has led to a decline in risk market liquidity and obvious signs of capital withdrawal. The corresponding financial premium of European and American crude oil futures prices has also further increased. Extrude.
Taken together, under the background of the second outbreak of the epidemic, oil prices are once again facing huge pressure from both ends of supply and demand, and it is difficult for oil-producing countries to To eliminate barriers in the short term and make important production adjustments, although core oil-producing countries have sent signals to the outside world to slow down production increases. Zhongyu Information Crude Oil Research Group believes that market risk appetite will be severely suppressed before and after the U.S. election, the pace of expansion of the supply side of the oil market will be difficult to contain, and the market’s crude oil digestion capacity will further decrease. We judge that crude oil prices will continue to be weak. We judge that oil prices will continue Operating below 40 US dollars per barrel, the price center of US crude oil WTI may sink to the range of 34 to 37 US dollars per barrel in November, and the price difference between the Brent benchmark price and WTI may continue to narrow.
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