Slow recovery in international oil market

Since the beginning of the year, the international oil price has been warming up all the way, which has let the production reduction alliance "OPEC +" relax its vigilance. At the new regular production reduction meeting of "OPEC +", the oil producing countries unexpectedly reached the decision of "no increase in production", which injected a "heart tonic" into the oil market. The two benchmark oil prices reached the highest level in a year. On March 8, Saudi Arabia's important oil ports were suddenly attacked again, resulting in the price of Brent crude oil once exceeding $70 / barrel. Obviously, in addition novel coronavirus pneumonia, the major oil producing areas are still the major factors that affect the oil price trend. With the uncontrollable American shale oil output, the international oil market is now slowly seeking a new balance in the turmoil.

Maintain the current scale of production reduction

The 14th regular meeting of "OPEC +" production reduction was held by video on March 4, CO hosted by Saudi energy minister Prince Aziz Russian Deputy Prime Minister Novak. The meeting reached an unanimous decision to extend the current 1 million B / D production reduction level to April, but allowed Russia Kazakhstan to slightly increase production by 130000 B / D 20000 B / D respectively in April.

It is worth mentioning that the implementation rate of "OPEC +" production reduction rose 103% in January to 121% in February, further boosting the morale of production reduction in the next stage. April last year to the end of January this year, "OPEC +" has reduced its oil production by 2.3 billion barrels, making a great contribution to the rebalancing of the oil market.

In the novel coronavirus pneumonia epidemic situation, "OPEC +" is still cautious about the oil supply demand outlook, finally reached a decision of releasing the output in a short time. The original plan was to increase the output of 1 million 500 thousand barrels per day April. Prince Aziz said that although Saudi Arabia believes that oil demand will continue to grow in the future, it is still "cautiously optimistic" at this stage.

OPEC Secretary General Mohamed barjindo also expressed the same view, saying that the major economies' acceptance launch of the new crown vaccine program other stimulus programs have improved the market sentiment in the near future, but reminding all oil producing countries to remain vigilant flexible under uncertain market conditions.

Oil price jump is sustainable

The decision of "OPEC +" to maintain production reduction has boosted the rising momentum of oil price since the beginning of the year. As soon as the market opened on March 5, the two benchmark oil prices rose significantly. The closing price of Brent crude oil was 69.36 US dollars / barrel, that of WTI crude oil was 66.09 US dollars / barrel. On March 8, the port of Ras Tanura in Saudi Arabia was attacked, the price of Brent crude oil immediately reached a high of US $71.16/barrel, which was the first time in 14 months that the price of Brent crude oil rose above US $70, while the price of WTI crude oil rose to US $67.86/barrel.

Saudi Arabia said in a statement that it would take all necessary measures to maintain energy security, ensure the stability of energy supply crude oil export, ensure the safety of maritime trade routes in the Persian Gulf. As one of the world's largest oil ports, RAS Tanura has a daily export capacity of about 6.5 million barrels, making it one of the world's most protected oil facilities, according to the company.

The attack caused the oil market to fluctuate. The price of Brent crude oil fell immediately after breaking through US $70. It closed at US $68.24/barrel on March 8, while WTI closed at US $65.05/barrel. On March 9, the two major oil prices continued to fall, with Brent crude oil closing at US $67.52/barrel WTI closing at US $64.01/barrel; On March 10, the price of Brent crude oil rose slightly to close at US $67.90/barrel WTI to close at US $64.44/barrel.

A number of investment banks, consulting agencies traders are very concerned about the attack, especially after the "OPEC +" has just reached the decision to continue to reduce production, the prospect of the oil market to gain a firm foothold has been shaken again. The stability of the Middle East is still a major factor affecting the trend of oil prices. This attack reminds the industry of the fragility tension of the Gulf situation, which may change at any time. Therefore, the jump in oil prices is only temporary.

■ destocking is still the focus

The industry generally believes that the main theme of this year's oil market is still destocking. Up to now, the global crude oil inventory is relatively high, the possibility of oil price getting clear protection is high. It is more likely to follow the trend of moderate rise. Only when the inventory returns to normal level, can the oil price be expected to rise again.

OPEC expects global oil inventories to fall by about 400 million barrels this year. Andrew Wilson, head of research at brs, an independent ship broker, said that despite the high oil price, the market fundamentals are so strong, the main problem now is inventory level. Global offshore crude oil reserves stood at 81.2 million barrels at the beginning of March, slightly lower than the 84 million barrels at the beginning of January, according to kopler, a supplier of data on global oil gas trade flows.

"OPEC +" is willing to limit production raise prices, which will be a positive factor for the recovery of the oil market in the second half of the year. Rising oil prices will accelerate the speed of destocking. Morgan Stanley expects oil inventories in OECD countries to fall to a five-year average by the third quarter, earlier than the previous forecast for the fourth quarter.

Based on this, a number of institutions have raised their oil price expectations. Among them, Goldman Sachs expects Brent crude oil to break through $80 / barrel in the third quarter, while Fitch is more conservative. It is expected that the average price of Brent crude oil will be $64 / barrel $63 / barrel this year next, it will be stable at $70 / barrel in 2024, reach $72 / barrel in 2025. The average price of Brent crude oil is expected to be $56 / barrel this year $58.2/barrel next year.

Continue to be vigilant against shale oil

"OPEC +" continued to reduce production to the market a surprise, but the decision was made on the one hand to keep a close eye on the impact of changes in the epidemic situation on energy supply demand, on the other hand to continue to be vigilant about the increase of shale oil production in the United States.

Affected by the sharp drop in oil prices last year, the epidemic situation extreme cold weather in some areas, the overall shale oil production in the United States is about 16 million barrels per day, the number of drilling wells has rebounded last year's low“ OPEC + "oil producing countries are worried that too long production reduction will stimulate the rise of us shale oil, so they do want to maintain high oil prices.

The Wall Street Journal pointed out that the price of oil surged to US $65 / barrel at the end of February, largely due to the sudden snowstorm in Texas, the main producing area of us shale oil, resulting in the reduction of us shale oil production capacity by millions of barrels per day in a short period of time. As the weather in Texas returns to normal oil prices continue to rise, shale developers' production power may be stimulated.

Some analysts believe that at present, most shale oil producers in the United States strictly restrict capital expenditure. After all, the cost of reopening shale drilling platforms is very high, oil prices need to be high for a long time, but there is still the possibility of increasing production. There are signs that US shale producers that have increased production in the past year will continue to do so in the coming months. They are generally small private enterprises, benefiting the rise in oil prices, the main way to get cash is to increase production. They will be criticized by the stock market investors for choosing to increase drilling activities.

Double point energy, a private shale producer in the US, will increase production to more than 100000 B / D in the next few months, doubling to 80000 B / D in the past year, oil price.com.cn reported.

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Source: International Petroleum Network