On March 6, after OPEC+ failed to reach an agreement on a plan to reduce production by another 1.5 million barrels per day, market concerns intensified and international oil prices plummeted by nearly 10%. On March 7, the announcement of Saudi Aramco’s monthly crude oil pricing worsened the situation. The Middle East stock market staged a “Black Sunday” and Saudi Aramco’s share price fell below the issue price.
Affected by the news, market participants believe that energy and chemical commodities are expected to fall sharply on Monday. However, it is not ruled out that some varieties may fall to the limit. In the future, we need to continue to pay attention to changes in crude oil supply and demand, the development of overseas epidemics, and the resumption of work in domestic downstream industries.
Saudi Arabia starts price war
According to Bloomberg, last week 6. Saudi Aramco informed customers that it would lower the official crude oil price sold to various regions by US$6-8 per barrel, the largest discount in more than 20 years, in order to attract foreign refineries to purchase Saudi crude oil. According to the statement, the price of crude oil sold to Asia in April was reduced by US$4-6/barrel, the price of crude oil sold to the United States in April was reduced by US$7/barrel, and the discount of flagship Arabian Light crude oil sold to northwest European refiners was expanded. to US$8/barrel.
At the same time, Saudi Arabia also privately informed market participants that it would increase production if necessary, reaching a record level of 12 million barrels per day. Market views believe that Saudi Arabia’s move is equivalent to declaring war on the crude oil market.
Affected by the news, the Middle East stock indexes fell collectively at the opening on the 8th. Saudi Arabia’s TASI index fell 7.15% at the opening, and fell to 6883.3 points during the session; Kuwait’s stock index fell more than 10%, and the market suspended trading; the Dubai DFM Index in the UAE stock market fell nearly 8%; in the Egyptian stock market, the Cairo EGX30 Index fell nearly 4% . In terms of individual stocks, Saudi Aramco fell below the IPO price of 32 Saudi riyals at the opening, and then the stock price continued to fall to a record low level.
“Saudi Arabia’s increase in production The significance of the action itself is greater than the marginal increase in supply of the specific increase in production, which is somewhat similar to the situation in 2015. Saudi Arabia is carrying out epic price reduction promotions, which is obviously attacking the European market and seizing the market share of Russian oil companies. To a certain extent This will force Russia to return to the production reduction negotiation table.” Li Jing, an energy and chemical researcher at Minmetals Futures, said that in addition to increasing production, Saudi Arabia directly and significantly lowered the pricing of major crude oil of different grades. Among them, the discount of crude oil sold to Europe has the largest change. , sand heavy crude oil fell by US$7/barrel compared with March, and sand medium, sand light and sand ultra light crude oil fell by US$8/barrel compared with March.
She believes that, on the one hand, Russia’s fiscal budget data for this year has revealed that it is prepared for oil price fluctuations, and it may take some time to return to the negotiating table; on the other hand, the U.S. page The cost of rock oil is about US$45/barrel. Low oil prices will also put U.S. shale oil companies into losses and trigger a decline in U.S. shale oil production. Therefore, the above situation may further affect the supply side of crude oil.
In fact, the crude oil market has already suffered a plunge due to the news of the breakdown of negotiations. As of the close on March 6, the main WTI contract fell by 9.65%, and the main Brent contract fell by 9.33%, both recording the largest single-day declines in 11 years.
With the news of increasing production, oil prices will continue to drop. Become market consensus. Edward Bell, a commodity analyst at National Bank of Dubai, said that Saudi Arabia, the United Arab Emirates and other major OPEC oil-producing countries are expected to increase production in the rest of 2020 and will return to a market share-led strategy. However, this strategy has risks that cannot be underestimated for OPEC oil-producing countries. The financial situation may deteriorate as a result, the balance of payments may be in crisis, and the sustainability of monetary policy is also in doubt.
ING lowered its Brent crude oil price forecast for the second quarter from US$56/barrel to US$33/barrel, and WTI crude oil price forecast from US$50/barrel to US$28/barrel. USD/barrel.
“Since the crude oil market will usher in more new supply in 2020, the market’s expectations for market supply and demand were not very optimistic as early as the beginning of the year. In addition, the impact of the COVID-19 epidemic on crude oil Demand has a phased impact, and the market generally expects that the second quarter will usher in a process of inventory accumulation.” Li Chenghao, a crude oil researcher at GF Futures, said that the failure of OPEC+ policy will further drag down the fundamentals of the crude oil market, and the short-term support for oil prices can refer to the low in 2016. Overall, the current supply and demand in the crude oil market is still stable, especially domestic demand, which shows resilience. However, if OPEC increases production as scheduled in the second quarter, market demand may not be able to absorb the increase in supply, considering the impact of the new coronavirus epidemic overseas.
The global epidemic continues to ferment
In addition to supply-side variables, the global The development of the epidemic is not optimistic either. A spokesman for the World Health Organization confirmed to Xinhua News Agency reporters on the 8th that the number of countries and regions affected by the new coronavirus epidemic in the world has exceeded 100.
In Europe, the Italian National Radio and Television Corporation (RAI) reported on the 8th that Alberto Sirio (A.The rapid impact, coupled with the sharp drop in crude oil, may continue to fall. We cannot rule out the possibility that futures prices will continue to hit new lows, which will force the coal-to-ethylene glycol unit to be shut down for maintenance. ”
Yu Pengsen, an energy and chemical researcher at Zhaojin Futures, said that compared with the same period in previous years, the current asphalt fundamentals are stronger, mainly due to better demand expectations and domestic expansion of infrastructure construction in 2020. investment, the market has expectations for an increase in asphalt usage. At the same time, refinery operations are currently at a historical low, inventories are also low, and there are expectations of tight supply and demand in the market outlook. “Due to the above factors, the current short-term weak reality and expectations for asphalt are good The debate has never stopped. Judging from this week, there is great uncertainty in the trend of asphalt. If the game between Saudi Arabia, Russia and the United States over crude oil continues, the price of crude oil may fall further. Asphalt faces the risk of cost collapse, and prices will be difficult to improve. The delivery time is still far away, and a large futures discount pattern may form. This week’s trend will be difficult to continue last week’s gains. “
Xing Binbin, a methanol researcher at Yide Futures, believes that the methanol market will accelerate in the short term due to the failure to reach an agreement on production reductions and the significant negative impact of the Saudi price war. “In the short and medium term, , it is recommended to pay attention to the recovery of domestic terminal demand, domestic methanol import arrivals, and the development of the global epidemic, etc. In the long term, it is necessary to return to the fundamentals of the variety itself to judge the market trend. ”</p
