This year, in the cut, geopolitical risk rise in the pattern, oil prices continued to shock rise. However, starting from last Thursday, oil prices “flash”, WTI was below $ 44 / barrel, recently as high as $ 55 / barrel.
Libya and Canada crude oil production increased, Russia with the ambiguous attitude of the market to worry about. “Since mid-April, oil prices rebounded and suddenly turned down, down more than 15%. Fundamental itself has no significant deterioration of the change.” East futures futures crude oil analyst Jin Xiao told the first financial reporter.
In his view, OPEC semi-annual meeting held soon (May 25), oil prices fell to force the Member States to abandon differences and reach a decision to extend production. OPEC production lasted more than 4 months, but the effect is very limited. Even if the cut, oil prices are difficult to rise sharply. The realization of rebalancing needs to be achieved in a lower oil price environment, so the oil price outlook is not optimistic, WTI is expected to level down to 45 US dollars / barrel near the increase in the number of rigs and OPEC can withstand the lower price to find New balance.
As of May 7, Beijing time before the press release, oil prices rebounded, Brent oil price reported $ 49.43 / barrel, WTI oil price reported $ 46.51 / barrel. But the two are far from the recent 58 US dollars / barrel and 55 US dollars / barrel high still far away.
Oil price accident “flash collapse”
On Thursday, oil prices plunged 5%. Russian government spokesman Dmitry Peskov (Dmitry Peskov) said it has not yet decided whether to extend the crude oil production agreement is the day of oil prices fell “culprit.”
Russian Ministry of Energy issued a statement saying that the country has been in October last year on the basis of production to achieve reduction of 30.079 million barrels / day, exceeding the task of reducing production. According to previously agreed agreement, Russia needs to cut production in the first half of this year to 10,947,000 barrels / day. Russian Energy Minister Alexander Novak pointed out that he would hold talks with senior domestic crude oil companies to discuss the extension of the cut-off agreement, but he declined to make a statement on whether to support the extension of the cut-off agreement.
Worse, the world’s largest off-shore crude oil broker PVM said that Libya, Nigeria’s oil production or has begun to rise, leading to US oil, cloth oil again dropping. Cinda Futures said that Libya and Nigeria can be said that the oil market of the universal card. The two OPEC oil-producing countries have been exempted from production last month’s fuel production of 205 million barrels / day. Compared with October last year dropped more than 10 million barrels / day, but this situation or reversed this month. Two days, the two oil producers have announced production rose to 76 million barrels / day (Libya) and 200 million barrels / day (Nigeria), the two countries will further increase the production of global oil market damage.
Nevertheless, Jin told reporters that the May 25 OPEC semi-annual meeting, to achieve a greater probability of prolonged production. However, even so, oil prices on the action can be very limited, the fundamental reason is that production did not lead to a significant return to the level of inventory. If OPEC failed to reach agreement on the reduction, oil prices will face a greater downside risk. From the point of view of the oil ministers of the major member states, the vast majority of countries support the extension of the cut-off agreement, on the one hand because the policy does not continue to pay the cost is too high, on the other hand is the actual output process is not large, Maintaining the status quo is the best choice for each country.
Shale oil wells are rapidly recovering
Regardless of how the attitude of OPEC changes, it can ultimately determine the “bottom” of oil prices, the real decision is “top” is still the US shale oil.
The Energy Information Administration (EIA) announced that US crude oil production rose to 92.93 million barrels per day for the week of April 28, up from 9.265 million barrels per day in the previous week. And last week’s data show that the number of active oil drilling platforms in the United States rose for 15 weeks, another two-year high. This means that US oil producers to speed up the resumption of production, US crude oil inventories and production continued to rise on the international oil prices will continue to impose downward pressure.
In general, shale oil production costs are higher than OPEC. East China Futures Research Institute analysis said that the second quarter of 2015, the rebound in oil prices on the number of drill is not very obvious, the number of rigs only rebound in February will return to the downward trend. But since May 2016, the number of rigs has risen all the way. As of the end of April 2017, the number of rigs has exceeded the bottom of 2016 more than doubled, indicating that shale oil companies to reduce the efficiency of the results has been very prominent, that is, WTI average of 50 US dollars / barrel, the enterprise will not stop New investment.
In addition, Jin Xiao also told reporters that after the 2014-2016 low oil prices eliminated, the survival of the shale oil business has a strong competitive edge. Oil prices need to find a new balance between the increase in the number of rigs and OPEC can bear the price between the lower limit. If the oil price of the rig is less than the lower price limit that OPEC can afford, then the price war can only be restored.
The economic cycle peaked to suppress the goods
In addition to the supply side, the strength of oil prices and demand side is not unrelated.
The United States is still the world’s largest oil demand in the country, accounting for about 25% of the total global demand, but the proportion has been slightly lower; China is the world’s first, the United States is the world’s largest oil demand, The two major oil consuming countries, 2016 oil demand in the global proportion of more than 12%; India as an important emerging global economy, in recent years, rapid economic growth led to rapid growth in oil demand, oil demand in 2016 year-on-year growth rate of 7.3 %, But India’s total oil demand is small, only about 35% of China, so the growth is not large.
In April, the General Administration of Customs data show that China’s imports of crude oil from January to March 105 million tons, an increase of 15%. At this point, a quarter of China’s imports of crude oil 855 million barrels / day, beyond the United States to become the world’s largest market. In the first quarter of last year, the international market commodity prices in the low, and then continued to rebound, subject to commodity prices rose sharply year on year, a quarter of China’s overall import prices rose 13.5%, of which iron ore imports average price rose 80.5%, crude oil rose 64.7%.
However, the recent cyclical expectations of China and some Asian countries are strong, which also hit the market sentiment. China’s iron ore, rebar, coke futures fell sharply. China’s April manufacturing industry PMI fell to its lowest level in seven months, after China’s official manufacturing and service industry PMI fell 0.6% and 1.6% in March, respectively, showing services and manufacturing Both the slowdown in output growth, Monita Zhongzheng Health said the inflection point seems to have emerged.
In addition to the above negative factors, the future of the political properties of crude oil can continue to support oil prices?
“The current pattern of loose oil supply and demand reduces the market for supply disruption concerns, resulting in oil prices on the geopolitical sensitivity significantly reduced.” Guan Qingyou said that since 2014, there have been many global geopolitical events, such as the Ukrainian crisis, the Islamic countries (IS) rise triggered by the war in Iraq, Saudi troops sent to Yemen, Turkey shot down Russian fighters, the Turkish military coup, the British exit the EU, etc., have no significant impact on oil price fluctuations.