On April 15, the performance of crude oil made the optimist glasses who had previously shouted “buying crude oil at the bottom” fall below – the settlement price of U.S. oil WTI closed at $19.87/barrel, the highest price for WTI crude oil since April Futures fell below $20/barrel for the third time in intraday trading and the fourth time this year that they fell below this price. The first three times occurred on March 30, April 1 and April 14 respectively.
On April 15, the performance of crude oil made the optimist glasses who had previously shouted “buying crude oil at the bottom” fall below – the settlement price of U.S. oil WTI closed at $19.87 per barrel, which is 4 WTI crude oil futures fell below $20/barrel for the third time in March and the fourth time this year. The first three times occurred on March 30, April 1 and April 14 respectively. Judging from the performance of crude oil in the past month, US$30/barrel has become the “ceiling” price of U.S. oil. Low oil prices are no longer a “flash in the pan” as most people had predicted.
In this regard, Jin Lianchuang believes that the four bottoms of crude oil have confirmed that low oil prices are becoming “normalized”, which is determined by three aspects.
First of all, the normalization of the global epidemic determines the “deformation” of the market.
The international epidemic still shows no signs of getting better, and there is a positive correlation between the population of each country and the number of confirmed cases. This is the biggest threat to the global economy, regardless of whether it is the global economy. Whether it is a depression or a great recession, there will be no bottom for the market until the epidemic reaches an inflection point. The panic caused by the epidemic will cause the normal market rules to fail, and violent fluctuations will be accompanied by the “grey rhino” of the epidemic that frequently “tramples” the global financial market. Crude oil, as one of the most representative commodities and economic indicators, no longer represents prosperity, but decline. On the one hand, there is a global lockdown and seclusion; on the other hand, people’s income has dropped sharply and their willingness to consume has decreased. None of these problems can be solved by OPEC+’s production cuts. Even from a certain perspective, unless a war occurs, the rise in crude oil lacks effective support.
Secondly, oil prices The causes of the four dips are not the same, but they serve the same purpose.
The first two declines were mainly due to the price war between Saudi Arabia and Russia, and the latter two were due to the intensification of panic about market demand. Compared with price wars, the causes of demand panic are more lasting, more terrifying and more deadly. Many people joke that “water is more expensive than oil”, but they don’t know that water is an urgent need, and oil can be used by panicked consumers. Therefore, whether there is a surplus on the supply side of crude oil ultimately depends on demand, and other means such as strategic oil reserves cannot fully absorb it. From a game perspective, for OPEC countries that mainly rely on crude oil exports as their economic source, instead of reducing production themselves and leaving the remaining “fishing profits” in the market to other countries, it is better to continue price reduction promotions and gain market share. Therefore, in the global crude oil Before demand panic eases, it will be difficult to reduce the pressure on the supply side of crude oil.
Once again, the structure of underlying energy prices has changed significantly.
Oil, gas, and coal are the three most basic energy types. The falling price of crude oil is not “a one-man battle.” On April 16, the main contract price of natural gas in the United States was only 1.59 USD/mmbtu has fallen by nearly 30% from USD 2.26/mmbtu at the beginning of the year; the thermal coal May contract closed at 478 yuan/ton on April 15, which also fell by as much as 10% from 552 yuan/ton at the beginning of the year. On the surface, it seems that the decline of crude oil has led to the decline of gas and coal prices, but Jin Lianchuang believes that this is actually the restructuring of global energy prices. In fact, it is not just energy commodities that are being reconstructed. The prices of commodities including copper, plastics, and rebar have changed significantly after the epidemic. If the collapse of crude oil is that the economy has suffered from “pancreatic cancer,” Well now it’s serious and metastasis has occurred. Therefore, when the potential energy of the entire financial market is in a downward stage, the probability of crude oil going retrograde becomes smaller and smaller.
But good fortune comes from misfortune. Jin Lianchuang believes that low oil prices will become normal in In the short term, the advantages outweigh the disadvantages for China. As the first major economy to emerge from the epidemic, China currently controls the lifeblood of crude oil demand and can take advantage of low oil prices to improve imports and reserves. However, long-term low oil prices will also affect the demand, development and export of the crude oil downstream industry chain, so it is necessary to adjust the operating rhythm in a timely manner. But for now, whether crude oil is “buying the bottom” or not, the bottom is right there, so there is no need to be too anxious. Too much speculative psychology is not conducive to rational judgment.
Crude oil reached its fourth bottom on April 15. The market reaction has been much calmer than the previous times. There are even market expectations that $15/barrel is WTI. floor price. In this regard, Jin Lianchuang predicts that the current low oil price may continue until at least June, and before that, the mainstream fluctuation range of WTI may be between 20 and 30 US dollars per barrel.
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