Oil prices have plummeted again after rebounding for just a few days! On November 30, WTI crude oil fell nearly 5% overnight, the largest drop in more than two months, and Brent crude oil also fell by more than 4%. According to industry insiders, the resignation of the Iraqi Prime Minister was the trigger for the sharp drop in oil prices, and recent signs have made all parties increasingly pessimistic about the prospects of the OPEC meeting to be held next week.
International oil prices plummeted across the board
International oil prices plummeted across the board. As of the close, the main January contract of U.S. WTI crude oil fell by US$2.72 to US$55.42 per barrel, a drop of 4.68%. The day’s decline hit a new high since September 17 this year.
Brent crude oil also fell significantly, with the main February contract closing at $60.73/barrel, down 2.54 USD or 4.01%. In addition, Shanghai crude oil futures, which closed earlier, closed at 450.7 yuan/barrel during night trading, a decrease of 2.47%.
The resignation of the Iraqi Prime Minister may be the trigger
In the opinion of industry insiders, the resignation of the Iraqi Prime Minister may be an important trigger for the overnight oil price plunge.
According to CCTV News on the 29th, Iraqi Prime Minister Adil Abdul Mahdi said that the recent nationwide demonstrations in Iraq have lasted for nearly two months, and the country is in an extreme state. Difficult situation, the parties involved are unable to control the situation. In order to protect the rights and interests of the Iraqi people and prevent the country from slipping into the whirlpool of violence, chaos and destruction again, he decided to resign as prime minister, hoping that the Iraqi government can get back on track.
Demonstrations and protests broke out in many places in Iraq from October 1 to 9 to protest against government corruption, poor services and high unemployment. Since October 25, a new round of demonstrations and protests has occurred in many cities in Iraq. Demonstrators continue to protest against government corruption, lack of public services and high unemployment, and call on the government to advance reforms. Until now, the wave of protests has not stopped.
Iraq is OPEC’s second-largest oil producer, producing nearly 5 million barrels a day, and analysts say if anti-government protests continue in Iraq, they could eventually affect oil exports. Affected by the situation in Iraq, international oil prices have rebounded continuously. Grand Ayatollah Ali al-Sistani, Iraq’s most influential Shiite cleric, has urged the Iraqi parliament to stop the country’s slide into chaos.
Adil Abdul Mahdi’s resignation has led some market investors to believe that the protests in Iraq may subside in the future. For this reason, the risks in the crude oil market The premium faded, sending oil prices plummeting.
John Kilduff, a partner at Again Capital, said in an interview with foreign media reporters that the current drop in oil prices was due to the demands of Iraqi protesters being met. . , investors may now believe that the possibility of disruption to Iraq’s oil exports has diminished.
However, the market also has different interpretations of the news. Some analysts believe that this may be a misjudgment by investors. Iraqi protesters have already pointed their finger at Iran, and the future may become more uncertain as a result.
Market expectations for the OPEC meeting have turned pessimistic
In addition to easing concerns about the situation in Iraq, the decline in oil prices is also largely related to the market’s bearish view of the upcoming OPEC meeting (OPEC) meeting.
On December 5, OPEC and non-OPEC members will hold a joint meeting in Vienna to discuss the next steps for relevant oil-producing countries. There have been previous reports that OPEC and its allies may extend production curbs until mid-2020, while the current oil supply reduction agreement will last until March 2020. International oil prices were once boosted, but the latest situation is undergoing some changes.
An Ziwei, a senior crude oil analyst at the Orient Securities Derivatives Research Institute, said that crude oil prices suffered a heavy drop in the trading day after the US Thanksgiving holiday, with Brent oil and U.S. oil both falling by more than 4%. . An Ziwei believes that market sentiment is unstable. On the one hand, the progress of Sino-US trade negotiations has caused the market to worry about renewed variables and rising panic. On the other hand, the market has revised its expectations for OPEC+ to deepen production cuts. As the OPEC annual meeting approaches, there is more and more news about the future direction of the production reduction policy, and it is difficult to distinguish between true and false.
“This week’s news said that Russia requested to readjust oil production quotas at the OPEC+ meeting because its oil production statistics have always included condensate statistics. Before that, Russia also Emphasizing the difficulty of reducing production in winter. Russia’s implementation of production reduction has always been “verbal rather than actual”. Since this year, it has only met the standard from May to July when crude oil chlorine pollution occurred, and the other months have been in a state of overproduction. Therefore, Russia is negative about production reduction. The statement is not surprising. The most eye-catching thing is the change in attitude of Saudi Arabia. The latest news is that Saudi Arabia will no longer make up for the over-production of countries such as Iraq and Russia through its own excessive production cuts, and will no longer compensate for the substandard implementation rate of production cuts in these countries. Pay the bill. This statement can be interpreted in two ways. One is that Saudi Arabia may no longer cut production excessively, and the other is that Saudi Arabia may take certain actions to force other member states to improve their compliance, but the specific measures are still unclear. No matter where it is Both interpretations indicate that OPEC+ will deepen in the future.Miscarriage is unlikely. The final result of the meeting is still unknown, but we believe that OPEC+ policy adjustment space is limited, the status quo is likely to be maintained, and it is difficult to have unexpected results. ” An Ziwei pointed out.
According to the TASS News Agency, Russian Energy Minister Novak said on Friday that he hopes OPEC and its non-OPEC allies will decide whether to extend oil production cuts closer to April. The agreement makes a decision. In addition, Russia plans to exclude condensate production from OPEC’s production reduction target, but a final decision has not yet been made. Novak has stated that OPEC should exclude condensate production growth from Russia’s production reduction target. , because the country’s newly increased condensate production mainly comes from new natural gas fields and will not be used for export, so it should not be counted in the production reduction action.
Also worthy of attention There is also the situation in the United States. Driven by shale oil technology, this rising energy power is having a huge impact on the global energy market. Data released by the U.S. Energy Administration (EIA) on the 29th showed that U.S. crude oil and oil exports in September Exceeding imports by 89,000 barrels per day. This is the first time since government records began in 1949 that the United States has become a net exporter of crude oil and petroleum products in a single month. The EIA Energy Outlook report released in January this year stated that as U.S. crude oil and natural gas With the increase in production and the reduction in domestic demand, the United States will become a net energy exporter in 2020. The agency also predicts that in the next ten years, U.S. crude oil output will increase year by year, setting a new historical record. Until 2027, the growth of U.S. crude oil production will Leveling off. The surge in shale reserves in the Permian Basin in west Texas and southeastern New Mexico is a major driver of energy independence.
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