Just 10 days into 2020, we have witnessed the geopolitical conflict erupting between the United States and Iran. Under the influence of the explosive US military beheadings and Iranian missile counterattacks, oil prices quickly jumped by $3 on January 3 and January 8 respectively, which made the market very excited. Just entering 2020, the performance of oil prices was like a slow piece of music that suddenly entered a climax stage, surprising the market. However, as the situation between the United States and Iran gradually eased, the soaring oil prices returned to an astonishing plunge. In one day, oil prices fell by more than 6 US dollars, with a fluctuation range of more than 10%, which is comparable to the amplitude of a month.
The excitement brought by this geopolitical conflict to investors is like a sudden shot to the market A large dose of cardiotonic drug can instantly make investors extremely excited. However, the drug strength quickly fades away, and the tense nerves suddenly relax, making investors feel very tired all of a sudden. The strong stimulus in the short term consumes too much of the market’s energy, and it is difficult to regain interest in the small geopolitical frictions in the short term. This will take the market some time to recover, and the adjustments that were previously disrupted by geopolitical conflicts are back on stage. , becoming the main rhythm of crude oil price fluctuations before the Spring Festival.
So, regarding the future trend of oil prices, what points should the market pay attention to next?
(1) The influence of U.S. energy independence on the crude oil market
There is something very interesting, and I think it is something that we need to pay special attention to when analyzing the crude oil market.
Trump clearly mentioned in his national address on the morning of January 8, US time, “We are now the world’s largest oil and natural gas producer. We are energy independent. We no longer need Middle Eastern oil.” This has led many experts to come out to “refute rumors” that Trump is wrong and that the United States is still importing Middle Eastern oil. This obviously does not understand what Trump wants to say.
Indeed, the United States still maintains an import volume of more than 6 million barrels per day. Importing crude oil from the Middle East is still a very positive option, but we need to note that the United States is still importing crude oil from the Middle East. Crude oil exports hit a record last week, reaching 4.46 million barrels per day, ranking third in the world after Russia and Saudi Arabia. If the export of refined oil products from the United States is included, the United States has become a net exporter for two consecutive months. This is the first time in the past 30 years. In 2020, the United States is likely to maintain net exports of all petroleum products throughout the year. national identity.
Therefore, Trump said that the United States does not need Middle Eastern crude oil, and the energy independence of the United States is a very, very important signal. As the world’s largest crude oil producer and consumer, it is likely to become the world’s third largest net exporter of crude oil in 2020. Such a position in the energy market will undoubtedly further enhance the United States’ influence on the global crude oil market.
(2) Challenges faced by China as the largest importer of crude oil
According to the current relatively clear increase in supply and demand in the crude oil market, China contributed 70% of the global demand increase in 2019. It can be said that it is definitely the “leader” in the demand side of crude oil. If not With China’s contribution especially in the second half of the year, it is estimated that oil prices will fall a lot in 2019.
China’s crude oil imports increased by leaps and bounds at the end of 2019, reaching as high as 11.15 million barrels per day in the fourth quarter. This number has exceeded the second and fourth quarters. The total import volume of the three major crude oil importing countries is nearly 5 million barrels per day more than the second-ranked United States crude oil import volume. This has also made China an important customer that major crude oil exporting countries around the world are competing for. Saudi Arabia, Russia, Brazil and even the United States are trying every means to strengthen crude oil exports to China. As China becomes the world’s largest net importer of crude oil and distances itself further from other countries, we can’t help but feel uneasy about its import dependence of up to 75%. After all, crude oil is not an ordinary commodity. As a very important strategic material, with such a high degree of external dependence, ensuring energy security undoubtedly requires us to make greater efforts.
Recently, under the influence of the geopolitical conflict between the United States and Iran, the absolute price of crude oil has fluctuated significantly. In this process, we can clearly see that as a representative of consumption areas The performance of my country’s SC crude oil futures is significantly stronger than the international oil price, which also shows that as the demand side, we are more responsive to these unstable disturbance factors on the supply side. At present, it is obvious that our country’s bargaining power in the crude oil market is still very weak, and we still have a long way to go. I hope that the Chinese people can work together as one, especially the major crude oil trading companies, to try to use RMB to price crude oil trade, make full use of the benchmark price function of my country’s INE crude oil futures in the place of consumption, and gradually enhance our bargaining power.
In this regard, we must praise Shanghai International Energy Trading Center��The efforts that have been made. It is reported that in order to make it more convenient for industrial customers to use SC crude oil futures to control procurement costs and manage risks, the Shanghai International Energy Trading Center has decided to carry out from January 13, 2020 (Monday) to February 7, 2020 (Friday) Crude oil futures TAS (settlement price transaction) instruction simulation trading. We have always hoped that China can develop and expand its crude oil futures and interact with the international market to obtain an objective and reasonable benchmark price for our crude oil consumption in the Asia-Pacific region to protect the basic interests of our country’s petrochemical industry. We hope that in the future we can complete this important task.
(3) OPEC enters the implementation period of deepening production cuts
Time has entered In January 2020, OPEC officially ushered in the stage of deepening production cuts. Oil production in the Middle East has not been disrupted by rising tensions, with other signs this week pointing to ample supply. Surveys, including those from within the industry, show OPEC production fell in December ahead of the new deal. However, the geopolitical premium once pushed up oil prices, which made us very worried that excessively high prices would make it difficult to effectively implement the production reduction agreement. Fortunately, this risk has been reduced as oil prices have fallen. However, some analysts said production was still higher than expected demand in early 2020. Birol, director of the International Energy Agency, said that the world still has a surplus of 1 million barrels per day of crude oil supply, and the slowdown in India’s economy may affect the growth of crude oil demand. Judging from the supply and demand of the U.S. oil product market in the past two weeks, U.S. demand is still weak, and according to OPEC estimates, China’s crude oil demand growth will decline in 2020, only 310,000 barrels per day. The demand side will still plague the market in 2020, which will also further increase the test on the supply side. In the coming period, we will continue to observe changes in the supply and demand structure.
In addition, Ministry of Commerce spokesperson Gao Feng revealed at a regular press conference on the afternoon of January 9 that at the invitation of the United States, members of the Political Bureau of the CPC Central Committee, Liu He, Vice Premier of the State Council and the Chinese leader of the China-US Comprehensive Economic Dialogue, will lead a delegation to visit Washington from the 13th to the 15th of this month to sign the first phase of an economic and trade agreement with the United States. The teams of both parties are in close communication on the specific arrangements for signing the agreement. The market will also pay attention to its specific progress in the first half of next week. With the foreshadowing in the fourth quarter of last year, the market has full expectations for the easing of Sino-US trade, and it is expected that the market will not react much.
Overall, in the first quarter of 2020, against the backdrop of OPEC deepening production cuts and the overall stabilization of the macro environment, crude oil prices The market has the opportunity to maintain a relatively strong pattern. Whether it can effectively improve in the later period depends on changes in the market supply and demand situation. Unsurprisingly, the crude oil market will continue to oscillate during the period before the Spring Festival, China’s traditional holiday. We will pay attention to the lower support SC450 and WTI55 after the correction. , Brent’s performance at the 60 mark. </p
