Starting at a low-end, with twists and turns
The oil price trend in 2019 can be simply described as “starting at a low-end, “Twists and turns” to summarize.
After the international oil price fell sharply in the fourth quarter of 2018 in 2019, as the United States escalated sanctions on Venezuela and Iran, oil prices recovered significantly in the first quarter. However, the market reversed and weakened in the second quarter under the influence of macro factors such as the United States’ announcement to impose a 10% tariff on the remaining 300 billion Chinese goods, and the weak market continued until mid-September.
On the weekend of September 14, the Abqaiq processing plant, Saudi Arabia’s largest natural gas and oil processing plant, was attacked. The next week, oil prices jumped to a high of $15/barrel; but with Saudi Arabia’s new Oil prices fell to low support again after the energy minister announced that Saudi Aramco would be able to fully restore production by the end of the month. In the fourth quarter, the overall oil price returned to an upward trend again. China and the United States are expected to reach a first-phase trade agreement, and the OPEC+ production reduction alliance announced after the meeting on December 5-6 that it would increase production by 500,000 barrels per day in the first quarter of 2020. , oil prices have been pushed to the annual average price position and are expected to end there. Looking at the whole year, excluding the high period in April, the main fluctuation range of WTI crude oil futures is between 50 and 60 US dollars per barrel, Brent crude oil futures fluctuates between 59 and 69 US dollars per barrel, and the main fluctuation range of Shanghai crude oil futures is between 420 and 420 US dollars per barrel. 465 yuan/barrel.
2018-2019 international oil price trend chart (WTI crude oil and Shanghai crude oil futures SC) from Reuters EIKON
Geographical turmoil, bottom support
In 2019, geopolitical events affecting the security of oil supply occurred frequently. In addition to the attack on Saudi oil facilities in September, an oil tanker passing through the Strait of Hormuz was attacked in the waters of Oman in May, and an Iranian oil tanker was seized by the United Kingdom in Brotu in July, which led to Iran’s Retaliatory seizure of British oil tanker transiting the Strait of Hormuz. However, the impact of geopolitical events on oil prices is only a pulse-like rise and fall. On the one hand, the reason is that after the United States achieved oil independence, it had no intention of directly participating in the geopolitical conflicts in the Middle East “for free”, which caused the impact of geopolitical risks in the Middle East on oil supply security to be “chaotic and constant”. The abundant capacity of the supply side weakened the response to oil shortages. Supply anxiety; on the other hand, the poor performance of the global macroeconomic and concerns about future uncertainty have caused the market to be generally pessimistic about the growth of global oil demand. However, WTI crude oil futures have also received strong support every time they approach US$50/barrel, and other global benchmark crude oil price fluctuations have also shown bottom support.
Supply game, the balance is tightening
In 2019, the supply side of the global oil market is still a game of “one increase and one decrease”. The OPEC+ production reduction alliance maintains a high production reduction compliance, especially Saudi Arabia, which takes the lead in undertaking production cuts beyond the quota, while Iran and Venezuela are passive due to US sanctions. Cut production. According to the monthly report data released by OPEC in November, OPEC crude oil production in October 2019 was 29.65 million barrels per day. Based on OPEC crude oil production in October 2018 (excluding the crude oil production of Qatar, which subsequently withdrew from OPEC), it decreased by 2.64 million barrels. barrel/day. The United States is still the country with the largest increase in global crude oil production. The U.S. Department of Energy’s weekly report in the first week of December showed that U.S. crude oil production reached a record high of 12.9 million barrels per day, an increase of 120% from the 11.7 million barrels per day announced in the first week of 2019. Thousands of barrels/day. Therefore, the benefits of OPEC’s vigorous production cuts were offset by the slowdown in global oil demand growth and the negative effects of the release of new global upstream production capacity. The overall supply and demand balance tightened in 2019, and inventories declined slightly.
The east is strong and the west is weak, and the structure is unbalanced
From the global oil From the perspective of the geographical pattern of supply and demand, the previous balance pattern between east and west has been gradually broken, and the pattern of strong east and weak west has further taken shape. OPEC’s production cut artificially reduces the supply of crude oil to the Asia-Pacific region, which is still the core growth area of global oil demand. This has aggravated the shortage of supply in the region and is “strong”. The western market, including the United States and European consumption areas, is already saturated with oil consumption, but the new production capacity in the United States, Canada, Brazil and other areas has undoubtedly aggravated the oversupply in the region, which is considered “weak”. The new production capacity represented by U.S. shale oil is lighter in quality, while the reduced crude oil is basically medium and heavy crude oil. For example, Venezuela’s Mari crude oil has always been the main oil used by domestic local refineries to produce asphalt. Under the geographical supply and demand pattern in which the east is strong and the west is weak, the structural contradictions among oil types are further aggravated.
Forecast of oil supply and demand balance in 2020
For 2020 as a whole The supply and demand balance situation is expected, and the views of major institutions are basically the same. The macro impact on oil demand remains important, and despite weak growth in 2019, institutions are cautiously optimistic about oil demand growth in 2020. The U.S. Department of Energy estimates that global oil demand growth in 2019 is only 750,000 barrels per day, but it is expected that oil demand growth in 2020 will reach 1.37 million barrels per day. The International Energy Agency (IEA) predicts that global oil demand will grow by 1.24 million barrels per day in 2020, as the International Monetary Fund (IMF) predicts that global economic growth will accelerate from 3% in 2019 to 3.4%, but the Sino-U.S. trade Uncertainty about the prospects of negotiations also poses a threat to the global economy and the outlook for global oil demand.”It’s easy to hide from open guns, but hard to guard against hidden arrows.” First, oil tankers were attacked by unknown militants, and then Saudi oil facilities were attacked by large-scale drones, which once caused the largest crude oil and natural gas processing plant to cut off supply. War in the Middle East The transformation from Western countries directly engaging in war to proxy war has caused undercurrents in the geopolitical situation in the Middle East, posing various potential threats to the security of oil supply. This has also put forward higher management requirements for companies to avoid oil price risks. A single Futures tools need to be further extended to options tools.
Third, the release of conventional oil projects when they are put into production. In addition to shale oil in the United States The release of production capacity in Brazilian pre-salt oil in the Atlantic Ocean, giant offshore oil fields in Guyana, and new oil fields in the Norwegian North Sea will further make the global oil geological supply and demand balance pattern appear “strong in the east and weak in the west.” To balance the release of new production capacity, there is undoubtedly a need for production in the Middle East Oil countries unite to deepen continued production cuts.
Fourth, Canada’s resource export encounters bottlenecks. Due to the obstruction of environmental groups, Canada There has always been a bottleneck in oil sands output. The expansion of the westbound Trans Mountain pipeline has been delayed. The Keystone II pipeline approved by Trump has also not been implemented. The Keystone I pipeline leaked and was operated at reduced pressure. Railway transportation capacity is stretched. Transportation capacity The bottleneck has caused oil prices in Canadian oil sands production areas to be significantly discounted to oil prices in the U.S. Gulf Coast, which is not conducive to Canada’s upstream production increase.</p
