Fabric Products,Fabric Information,Fabric Factories,Fabric Suppliers Fabric News Oil prices have been blown up by the U.S. non-agricultural data. Can the OPEC+ meeting give bulls another boost?

Oil prices have been blown up by the U.S. non-agricultural data. Can the OPEC+ meeting give bulls another boost?

This week, the optimism and resilience of the bulls allowed crude oil prices to break through the resistance level strongly. With the gradual improvement of fundamentals and favorable macro factors, Brent crude…

This week, the optimism and resilience of the bulls allowed crude oil prices to break through the resistance level strongly. With the gradual improvement of fundamentals and favorable macro factors, Brent crude oil reached the important mark of 40 US dollars per barrel in one fell swoop. Oil prices on Friday Climbing again, Brent rose to a maximum of $42.5/barrel. In this round of price increases, the Brent 08 contract has nearly doubled, the WTI 07 contract has increased by 130%, and the SC 07 contract has increased by 35%.

There are two important time points this week. One is that OPEC+ announced a meeting to discuss the reduction of 9.7 million barrels. The production cut quota per day was extended for one month, and then oil-producing countries basically agreed. Saudi Arabia also hopes to conduct corresponding assessments of supply and demand every two months in the future to determine whether it is necessary to continue to extend the current production reduction agreement. Crude oil bulls took advantage of this news to vigorously push up oil prices, causing oil prices to break through the important mark of 40 US dollars per barrel.

The latest news shows that at the ministerial meeting between OPEC and non-OPEC oil-producing countries held on June 6, the oil-producing countries reached an agreement on production reductions. A statement issued at the meeting said that OPEC and non-OPEC oil-producing countries agreed to extend the 9.7 million barrels per day crude oil production reduction until the end of July; at the same time, countries that failed to complete 100% of their production reduction quotas in May and June will reduce production in July. Additional production cuts were made from September to September to compensate.

The statement said that in order to ensure that the implementation of production cuts is fair, timely and just, the Joint Ministerial Supervision Committee of OPEC and non-OPEC oil-producing countries will closely observe the world energy market and oil production levels. etc., and will hold monthly meetings until December 2020.

The second time point is Friday’s non-agricultural data. The data released far exceeded expectations. Crude oil prices have risen rapidly again. Most of the early gaps have been filled. If the bulls It can also continue to push up prices. Under the current optimistic mood, we cannot rule out the possibility that the early gap will be completely filled.

As prices rise, the forward curve gradually flattens. Saudi Arabia’s goal this time is to completely change the forward curve into a structure that is beneficial to bulls. Only in this way will future production cuts be implemented. Policies are more conducive for bulls to actively participate and push up prices.

The supply side has made great efforts

With the price As prices continue to rise, the influence of the demand side on the market has significantly weakened. Although the global epidemic has not been effectively controlled, at least it has not continued to worsen. The number of new confirmed cases has remained within a relatively stable range. This has caused the pricing part to have been reflected by the market, so the short-term epidemic problem will not become a major negative factor. , unless there is a second major outbreak globally or in the United States.

From the perspective of the number of new confirmed cases, the number of new confirmed cases globally remains around 100,000 per day, but recent trends show that the growth rate is accelerating, so it is necessary to Pay extra attention. The number of new confirmed cases in the United States remains at around 20,000 per day, but the recent situation in the United States has increasingly made us worry about a second outbreak of the epidemic. In addition to the United States, clusters of incidents have also occurred in Europe, Canada and other places, so the epidemic data in mid-June or the end of June may become the focus of market attention.

As the epidemic remains stable for the time being and demand slowly recovers, although we see that inventory levels are still high, all the market’s focus is on the supply side, so the supply Any disturbance at the end will become the object of market speculation. Inventory has been temporarily ignored because there has been no obvious increase. At the beginning of this week, there was news in the market that Saudi Arabia intends to advance the production reduction meeting originally scheduled for June 10 to June 4. The market coincides with the critical moment of choosing a direction. This move was interpreted by the market as OPEC forcibly raising oil prices to break through resistance. As an important means of positioning, the market has lived up to expectations, and Brent crude oil has begun to charge towards US$40 per barrel.

However, due to the inaction of Iraq and other countries on the production reduction issue, the meeting was not held on June 4. However, Saudi Arabia made good use of its own means to scare Iraq. It’s not easy. Saudi Arabia said it would consider terminating an additional 1 million barrels per day of production cuts if some oil-producing countries do not fully fulfill their production reduction obligations. You know, Saudi Arabia is not alarmist.

In early March, when Saudi Arabia wanted to organize a production reduction meeting, Russia strongly opposed it. Then Saudi Arabia came up with a trick to defeat the enemy. Brent crude oil dropped to as low as 16 US dollars per barrel. Amidst the panic in the market, various oil-producing countries finally participated in the production reduction meeting honestly and reached the largest production reduction agreement in history. Even Russia, which has always fished in troubled waters, promised to reduce crude oil production to 8.5 million barrels per day. This is What kind of courage?

Saudi Arabia’s implementation rate of production reduction is relatively high. According to May data, Saudi Arabia’s crude oil production is 8.7 million barrels per day, which is very close to 8.5 million barrels per day. Therefore, we start from There is no doubt that Saudi Arabia will cut corners on the issue of production cuts. However, the overall implementation of production reduction is not satisfactory. OPEC’s crude oil production in May was 22.01 million barrels per day, which is still 1.4 million barrels per day short of the production reduction target of 20.6 million barrels per day. Therefore, it is not surprising that Saudi Arabia suddenly became angry before the meeting.

Saudi Arabia’s irritation this time is not only for OPEC countries, but it certainly also contains warnings for non-OPEC countries, includingIt increased by 83% to about 1.6 million tons. However, gasoline and diesel sales in May still fell by 36% and 31% respectively compared with the same period last year, and the year-on-year decline in April exceeded 50%.

Although we see that the current overseas resumption of work and production is relatively active, the epidemic situation is still relatively severe. Although some areas have resumed work, they may not necessarily resume production. The same is true for the United States. We see that in the latest EIA data, U.S. refining input is still hovering at a low level and has not seen a significant improvement. The same is true for Europe. In the short term, we agree that market demand is gradually recovering, but it is still not to the point where it can support price increases. Therefore, the short-term upward trend in oil prices is more driven by the supply side.

Overall, short-term market risks are relatively large, and the market How it will play out next depends entirely on the outcome of the OPEC+ meeting at the weekend. In the short term, there are greater risks whether you are long or short. After the OPEC+ meeting, the market will give short-term market direction. In the medium to long term, the upward driving force provided by the supply side is still the main focus of the market. There is a high probability that the market will gradually enter the rapid destocking stage in the third quarter. Therefore, the overall market is relatively optimistic for the third and fourth quarters.

As for the path of oil prices, if the short-term market can see a correction to a certain extent, it will be the best opportunity to get on the oil price this year. However, we believe that the risk of chasing long prices at the current price is relatively high, and there is still a certain probability of a correction in the market. Therefore, for investors with long allocation needs, we still recommend waiting patiently.

In terms of domestic SC price fluctuations, the early high premium prices have been basically digested by the market. After the exchange approved the new crude oil delivery warehouse, the enthusiasm of the bulls was obviously hit. We have seen a rapid increase in SC warehouse receipts recently, which has cooled the overheated market to a large extent. Of course, the cooling of SC is also in line with the recent exchange rate. The substantial appreciation has a direct relationship. At present, we have observed that the price difference between domestic and foreign prices has basically returned to a reasonable range.

The currently high SC warehouse receipts and the SC warehouse receipts that are still in the process of being registered are the market trends that we can seize in the future. As the volume of warehouse receipts continues to increase, we believe that bulls will be more wary of SC, especially as the delivery month approaches. We do not rule out the possibility that a large number of bulls will actively move their positions, which to a certain extent restricts the room for SC price increases. . Therefore, compared with the strong Brent crude oil, it may be more appropriate to use SC pricing. However, the refinery currently does not have a large say in which pricing method to use and needs to seek the consent of upstream traders. Therefore, expanding the market size of SC as soon as possible and maintaining the relative stability of the SC market so that it can accommodate the large number of positions held by traders is a key factor in whether traders can actively accept SC pricing in the future. </p

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Author: clsrich

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