The oil supply risks caused by the tense relationship between the United States and Iran continue to subside, and there is no substantial interruption in oil supply. European and American crude oil futures have fallen for five consecutive trading days, and U.S. benchmark crude oil futures have fallen to the lowest level in nearly six weeks, which is also the lowest level as of October 2019. The longest losing streak since falling for eight consecutive trading days on the 3rd. On Monday (January 13), the February 2020 West Texas Light Oil futures settlement price on the New York Mercantile Exchange was US$58.08 per barrel, down US$0.96, or 1.6%, from the previous trading day, with a trading range of US$57.91-59.27; London Intercontinental The settlement price of Brent crude oil futures in March 2020 on the exchange was US$64.2 per barrel, down US$0.78, or 1.2%, from the previous trading day, with a trading range of US$63.92-65.27.
At the beginning of the year, the tense relationship between the United States and Iran caused market uneasiness and concerns about the safety of oil in the Middle East. International oil prices surged for a time. Brent crude oil futures briefly exceeded US$70 per barrel and rose to the highest price in eight months. However, the subsequent unexpected increase in U.S. crude oil inventories caused investors to turn their attention to weak seasonal demand. In addition, there were no abnormalities in oil supply in the Middle East, and international oil prices fell sharply.
Reuters quoted Saudi Arabia’s Energy Minister Prince Abdulaziz as saying on Monday that it was too early to say whether OPEC and its allies would extend the production reduction agreement that expired in March. He told an energy conference: “As tensions remain high in our region, Saudi Arabia will continue to do all it can to ensure the stability of the oil market. We want a stable oil market with sustainable growth in both demand and supply.” .” He also said that both high and low oil prices are undesirable. At worst, low oil prices could permanently damage the oil industry. Prince Abdulaziz also said that the United States is a strategic partner that plays an important role in international security.
The U.S. Energy Information Administration estimates that U.S. crude oil production will reach 13.2 million barrels per day in 2020, an average of 900,000 barrels per day more than in 2019. However, supply growth is slowing compared with past years, with crude oil production growing by 1.6 million barrels per day in 2018 and averaging 1.3 million barrels per day in 2019. In September 2019, the total daily exports of crude oil and petroleum products by the United States exceeded daily imports by 90,000 barrels. This was the first time that monthly exports of crude oil and petroleum products in the United States exceeded imports. But in its latest Short-Term Energy Outlook, released in January, the U.S. Energy Information Administration noted that the slowdown in crude oil production growth was due to a decline in drilling rigs over the past year, a trend expected to continue into 2020. But the report pointed out: “Despite the decrease in the number of rigs, crude oil production is expected to continue to grow as drilling efficiency and well productivity increase offset the impact of the decline in the number of rigs.”
Analysis by oil broker PVM Analyst Tamas Varga believes: “The reason for the decline in oil prices is that despite the escalation of tensions between the United States and Iran, oil production is unlikely to be affected. Market tensions have calmed down significantly, so oil prices are well below previous highs, unless actual production Otherwise, the rebound in oil prices will not be sustained.”
At the beginning of the year, geopolitical tensions in the Middle East prompted hedge funds to bet on rising Brent and WTI oil prices in the week ending January 7. Funds and other speculative funds added net long positions in crude oil futures and options. But analysts believe hedge funds may reduce their net long positions in crude oil futures and options as tensions in the Middle East ease.
Speculators’ net long positions in New York Mercantile Exchange light crude oil futures increased by 2.2%. The latest statistics from the U.S. Commodity Futures Management Commission show that as of the week of January 7, open positions in crude oil futures on the New York Mercantile Exchange were 2,244,930 lots, an increase of 99,363 lots. Large speculators held a net long 567,272 lots of crude oil futures on the New York Mercantile Exchange, an increase of 12,415 lots from the previous week. Among them, long positions increased by 12,161; short positions decreased by 254.
Managed funds’ net long positions in futures and options held by U.S. light sweet crude oil on the New York Mercantile Exchange increased by 1.66%, while those held by U.S. light sweet crude oil on the Intercontinental Exchange Europe market Net long positions in futures and options increased by 0.87%. According to the new classification, the net long positions held by managed funds in New York Mercantile Exchange crude oil futures and options increased to 288,430 lots from 283,723 lots in the previous week in the week ended January 7; among them, the long positions increased by 4,250 lots; the short positions decreased by 457 lots. . The net long positions held by managed funds in U.S. light sweet crude oil futures and options in the European market of London’s Intercontinental Exchange increased from 42,753 hands in the previous week to 43,123 hands; of which, long positions increased by 1,071 hands; short positions increased by 701 hands.
The market is waiting for China and the United States to sign the first phase of the trade agreement. Although the U.S. stock market rose and hit a record high, the decline in the U.S. dollar exchange rate suppressed the oil futures market.
On Tuesday, the U.S. Energy Information Administration will release the January “Shortage Energy Outlook”, making new forecasts on global oil supply and demand and international oil price trends. On Wednesday, OPEC will release its January “Oil Market Monthly Report” to assess OPEC production in December and forecast the world oil market’s demand for OPEC crude oil in 2020. On Thursday, the International Energy Agency will release the January “Oil Market Monthly Report” to assess the global oil demand and supply situation.
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