The Global Crude Oil Market is Cloudy
2019-05-16
The fluctuation of the short-term crude oil market is mainly affected by the macro risk aversion caused by Sino-US trade friction and the geopolitical tension in the Middle East. The overall fluctuation is large and the direction is uncertain. The internal INE crude oil is affected by the depreciation of the RMB and the tight supply of heavy oil. Stronger than crude oil in the outer disk. The medium-term leading oil price trend is still the supply side. The logic of the oil price increase in the first four months of this year is the continuous contraction of the supply side. However, at present, this logic has begun to change. In the future, the traditional oil-producing countries will increase production to make up for Iran, Venezuela, etc. The country's unplanned supply decline is expected to be strong, while the US shale oil output is also expected to accelerate. The logical switch means that the mid-term market price of oil will reverse and is expected to form a stage top. The geopolitical situation is tense and the US-Iranian relationship continues to deteriorate. The recent geopolitical situation has continued to strain and the changes in the sentiment of the crude oil market and the volatility of the market. The United States has terminated Iran`s sanctions exemption, and the potential Iranian supply disruption crisis has worried the market. In fact, since the middle of last year, Iran`s crude oil production and exports have shown a significant decline. In November last year, the United States announced that it would restart sanctions against Iran. Fortunately, countries and regions that mainly import Iranian crude oil have been granted immunity, making Iran`s crude oil export normally. Not completely cut off, but the decline is still obvious. In March of this year, only China, India, Turkey and Japan were importing Iranian crude oil, and China accounted for 60%. At present, Iran`s crude oil exports are about 1.3 million barrels per day. The United States is committed to reducing Iran`s crude oil exports to zero, but it is unlikely to be realized. In the past 40 years, the United States has launched several rounds of sanctions against Iran. Although it has indeed affected Iran`s crude oil exports, it cannot be completely cut off. Iran will use some hidden means to export crude oil, such as smuggling through neighboring countries such as Iraq, Pakistan, Afghanistan, etc., and sell it in the name of these neighboring flags. In addition, the Iranian tanker at sea will replace the country and turn off the wireless communication signal equipment. And other means to escape the tracing. This means that even if the Iranian sanctions exemption is cancelled, it will not be able to prevent the external supply of Iranian crude oil, and will only affect the export of some formal channels. The Iranian side is also tough on the sanctions against the United States. In addition to threatening to block the Strait of Hormuz, it also said it will insist on exporting at least 1.5 million barrels of crude oil per day as a condition for staying in the international nuclear agreement. In addition, four commercial ships in the Fujairah port of the United Arab Emirates were attacked last Sunday, two of which were Saudi ships. The Fujairah port is currently the world's largest ship refueling center, located near the Strait of Hormuz, combined with recent The situation in the United States and Iraq, the market speculation is what Iran did, but Iran denied it. In any case, the termination of the Iranian sanctions exemption by the United States will undoubtedly further worsen the US-Iranian relationship and continue to strain the geopolitical situation in the Middle East. Saudi Arabia has limited production space and will increase production in the future. This year, Saudi Arabia`s efforts to reduce production have been obvious. In March, Saudi crude oil production fell below 9.8 million barrels per day, which is 500,000 barrels per day lower than the production reduction target. Under the dual factors of excessive production cuts and the filling of the Iranian gap, Saudi Arabia has relatively limited space for further production reduction. At the same time, Saudi Arabia has a surplus capacity of 1.2 million to 1.5 million barrels per day, so it has the conditions for a substantial increase in production. However, the market is also worried that even if Saudi Arabia increases production, the increase in Saudi Arabia's summer crude oil power generation will reduce Saudi Arabia's external supply to a certain extent. Saudi Arabia uses crude oil to generate electricity in the summer, which is 300,000-600,000 barrels per day higher than other seasons. In 2005, it reached a maximum of 900,000 barrels per day. However, as other energy sources such as natural gas and fuel oil are used for power generation, the demand for power generation of crude oil has dropped significantly. It has dropped to around 500,000 barrels per day in 2018. According to this level, the amount of crude oil used for power generation in Saudi Arabia in summer. The increase was only about 200,000 barrels per day, and the impact on its crude oil exports was not significant. In addition, in the context of the expected increase in production in Saudi Arabia, other countries such as Russia that are not strictly implementing production cuts are likely to continue to cut production, so the production reduction agreement may be [in name only", given the passive reduction in supply in countries such as Venezuela and Iran. At the current level of oil prices, the production reduction agreement in the second half of the year may [shrink" or even terminate. US crude oil output is expected to accelerate as of the week of May 3, the average daily output of US crude oil reached 12.2 million barrels, and reached 12.3 million barrels per day in the previous week, setting a new high for the year, but in the previous period, the growth rate of US crude oil production In the continued slowdown, the rig data representing the upstream investment boom has continued to decline, which is directly related to the fall in oil prices in the fourth quarter of last year. However, according to the lag time of the drilling rig for about 4 months, the number of rigs is expected to rise again in the future. According to the year-on-year growth rate of the production lag rig, about two months, the US crude oil production growth will accelerate before and after the middle of the year. In addition, we have seen a recent decline in inventory wells in US shale oil producing areas, which also supports the release of shale oil production. In the second half of the year, the new pipeline capacity of Permian to the Bay Area will reach 1.925 million barrels per day, which will further support the increase in shale oil production. Therefore, we believe that the probability of US crude oil production growth will accelerate in the second half of the year.
