On April 2, Saudi Arabia called for an emergency meeting between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing countries, hoping to reach a fair agreement to stabilize the oil market. According to the Saudi Arabian News Agency, Saudi Arabia called on OPEC and non-OPEC oil-producing countries to hold an emergency meeting that day in order to reach a fair oil agreement and restore balance in the oil market. Saudi Arabia has been working to reach relevant agreements at meetings of OPEC and non-OPEC oil-producing countries, but the countries failed to reach a consensus. Saudi Crown Prince Mohammed bin Salman had a phone call with U.S. President Trump earlier in the day. The two sides discussed topics of mutual interest, especially the situation in the world energy market. Trump expects Saudi Arabia and Russia to cut crude oil production capacity by 10 million barrels per day to 15 million barrels per day.
Analysts pointed out that it is really time for the United States to coordinate production cuts. If Trump wants to achieve an increase in oil prices, he must first persuade domestic producers to actively cooperate, and secondly, he must conduct a full exchange of interests with Russia. There is still considerable resistance to the actual implementation of the production reduction alliance. Therefore, although oil prices have gotten rid of the oscillating downward pattern, remember to chase higher in short-term operations. The market still needs time to verify the authenticity of Trump’s words!
In terms of market economic data, the number of people applying for unemployment benefits for the first time in the United States last week reached 6.648 million, a record high. Analysts believe that the previous market decline is likely to be priced in poor employment data, so the unemployment number did not have a big impact on the trend in early trading. However, some analysts report that as the U.S. economy declines sharply and more companies lay off workers, the number of initial jobless claims will continue to surge in the near future.
The cumulative number of confirmed cases worldwide exceeds 1.01 million, and the number of confirmed cases in the United States exceeds 240,000. According to real-time statistics from Johns Hopkins University in the United States, as of 6:21 on April 3, Beijing time, the cumulative number of confirmed cases of COVID-19 worldwide exceeded 1.01 million, reaching 1,011,490. The United States has the largest number of confirmed cases of COVID-19 in the world, with more than 240,000 cases, 242,182.
As of the close this morning, the US S&P 500 index rose 2.28%, the European Stoxx50 index rose 0.37%, the U.S. dollar index rose 0.65%, WTI crude oil rose 16.75%, and Brent crude oil rose 16.45 %, London copper rose 1.60%, gold rose 1.98%, U.S. soybeans fell 0.46%, U.S. soybean meal fell 1.81%, U.S. soybean oil rose 0.54%, U.S. sugar rose 2.20%, U.S. cotton rose 2.48%, CRB index rose 5.35%, BDI The index fell 0.00%.
Another thrilling night.
On April 2, the market suddenly reported that Russia and Saudi Arabia were expected to “shake hands and make peace” on the issue of production cuts. Affected by this news, international oil prices suddenly rose sharply during the session and continued to rise.
According to reports, U.S. President Trump said that he has met Saudi Crown Prince Mohammed bin Salman (Mohammed bin Salman) Salman, it is expected that Saudi Arabia and Russia will cut their prices by 10 million barrels per day to 15 million barrels per day.
According to Saudi official media reports, after President Trump’s communication, Saudi Arabia called for an emergency OPEC+ meeting, and OPEC+ will resume The crude oil market must be balanced. Iraq later issued a statement saying it supported Saudi Arabia’s call for an emergency meeting to restore balance in the oil market and prevent the decline in oil prices.
Russian President Vladimir Putin also called on crude oil producers and consumers to reach a consensus market solution on Wednesday. He does not want the market confrontation to continue. OPEC representatives said that Russia and Saudi Arabia have not yet reached an agreement on the scale of any production cuts. Saudi Arabia hopes that the United States, Canada, Mexico and other G20 members will join the production reduction plan.
As of the close, the main contract of WTI crude oil rose 24.67% to US$25.32 per barrel, setting a record for the largest single-day increase in history. The main contract of Brent crude oil rose 17.8% to US$29.14. USD/barrel.
In terms of U.S. stocks, the three major stock indexes in the New York stock market rose on the 2nd. Among them, the Dow Jones Industrial Average rose 2.24%, the S&P Index rose 2.28%, and the Nasdaq Index rose 1.72%.
It is worth mentioning that on April 2, corn, wheat and soybean futures prices on the Chicago Board of Trade fell across the board. Market analysts believe that the decline in U.S. corn and soybean exports this crop year is the main reason for the overall decline in agricultural product futures prices that day.
The June gold futures price, the most actively traded in the New York Mercantile Exchange gold futures market, rose by 46.3 US dollars on the 2nd compared with the previous trading day, closing at 1,637.7 US dollars per ounce, an increase of 2.91 US dollars. %. On the same day, the price of silver futures for May delivery rose 67 cents to close at $14.654 per ounce, an increase of 4.79%;The operating rate of 36% has returned to more than 60%, basically returning to normal.
“On the contrary, regarding tank capacity, due to the price war, the market structure has led to forward prices being higher than spot contract prices, which has further stimulated oil traders to purchase spot goods and stock up in large quantities. Currently, it has It has become an urgent problem for global oil companies to deal with.” Yang An pointed out that the current increase in tank rent in the industry is basically around 10%, and some range from 10% to 20%.
In this context, the U.S. Department of Energy requires oil producers to lease oil storage space to reserve strategic petroleum reserves. Senior U.S. government officials recently stated that U.S. oil companies have begun to reduce oil production as oil storage space is gradually exhausted.
The same is true in China. It is reported that relevant departments have recently requested that the national oil reserves of 90 days of net imports be reached as soon as possible and encourage companies to increase their own commercial reserves. It is said that the initial task is to take advantage of the current decline in oil prices and reach a national oil reserve of 90 days of net imports as soon as possible this year. After the initial 90-day net import volume target is reached, the national and commercial reserve size should continue to be increased to reach a 100-day or even 180-day usage scale in the future.
At the same time, SHFE Energy, a subsidiary of the Shanghai Futures Exchange, also issued an announcement on April 2, agreeing that Dalian PetroChina International Storage and Transportation Co., Ltd. will increase the storage capacity of crude oil futures. So far, the activated storage capacity of my country’s crude oil futures delivery warehouse has increased by 750,000 cubic meters to 4.3 million cubic meters.
If the crude oil price war ends, can oil prices return to previous levels?
Li Yunxu, energy analyst at SDIC Essence Futures, told a reporter from Futures Daily that at present, the high elasticity characteristics of oil and gas futures under low valuations will still be highlighted. There is no turning point in the epidemic situation and supply. Under the background that the profit margin has yet to be confirmed, the trending market may still have to wait.
Regarding the news last night that Russia and Saudi Arabia are expected to reach an agreement on production cuts, Li Yunxu said that judging from the specific production cuts, according to Trump, Saudi Arabia and Russia may further Cut production by 10 million to 15 million barrels per day, while Saudi Arabia has stated that if other oil-producing countries join in cooperation, it will consider reducing production to less than 9 million barrels per day (Saudi production in February was 9.683 million barrels per day), and some Saudi officials have stated that there is a production reduction The 6 million barrels per day scenario and the huge differences in the opinions of all parties caused huge shocks in oil prices during the session.
According to reports, the combined output of Russia and Saudi Arabia at the beginning of this year was about 21 million barrels per day. It is unrealistic for the two countries to reduce production by more than 10 million barrels per day. Judging from OPEC’s historical production reductions, the maximum production reduction reached 4.22 million barrels per day after three adjustments during the 2008 financial crisis is an important reference for its affordability. As of February this year, OPEC’s active production reduction countries have reduced production by 1.377 million barrels per day based on October 2018 production, of which Saudi Arabia has reduced production by nearly 1 million barrels per day. Under low oil prices, Saudi Arabia is faced with OPEC’s initiative to reduce production and its share of global crude oil suppliers is declining, and its demand for cooperation from other oil-producing countries is resolute.
At present, Russia has not expressed too much about the prospect of production cuts. Li Yunxu believes that it is not appropriate to have too many expectations for the implementation of ultra-large-scale production cuts, but what is certain is that Saudi Arabia has come forward for the first time in recent days. The statement that production is considered to be reduced has completely reversed the expectation of production increase. The supply-side bullishness has the motivation to continue to be digested. If there is a clear time and other substantive news to come to light, short-term bullish sentiment will be further released. Overall, oil prices have a relatively strong short-term rebound driven by the shift in Saudi Arabia’s production expectations and the passive decline in shale oil production. The monthly difference in the external market has also gradually narrowed. However, it may still be difficult to get out of the trend market before the epidemic expectations in Europe and the United States shift.
Yang An told the Futures Daily reporter that if it is as Trump expected, then we deserve to celebrate the increase in international crude oil last night. In fact, as soon as Trump finished speaking, Saudi Arabia and other U.S. officials came to undermine him one after another, without taking the commander-in-chief’s face seriously at all.
Yang An said that judging from the performance of the United States and Saudi Arabia, the transition trend of OPEC+ to a global production reduction alliance is obvious. The United States is already impatient on the issue of production cuts. Shale oil producers are about to enter a period of large-scale bankruptcy. Once low oil prices continue, the wave of bankruptcies of oil companies will greatly affect the financial order of the United States. The operation of maintaining financial stability in the United States will It will be more difficult. “Saudi Arabia expressed the hope that the G20 countries represented by the United States and Canada will also join in the reduction of production. If the United States can eventually join, then there is a high probability that other countries will also participate.”
Yang An pointed out that now the market has really reached the time for the United States to coordinate production cuts. If Trump wants to achieve an increase in oil prices, he must first persuade domestic producers to actively cooperate, and secondly, he must conduct a full exchange of interests with Russia. There is still considerable resistance to the actual implementation of the production reduction alliance. Therefore, although oil prices have gotten rid of the oscillating downward pattern, remember to chase higher in short-term operations. The market still needs time to verify the authenticity of Trump’s words!
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