In the early morning of June 17, after the Federal Reserve’s interest rate meeting, it released negative news about raising interest rates in 2023. Crude oil prices fell back. At the same time, from a technical perspective, crude oil showed a certain divergence on the weekly line. As a result, there are certain differences in the market regarding the future trend of crude oil prices. However, after considering multiple price factors, the author believes that the rise in crude oil prices in the second half of the year is still worth looking forward to.
The situation of supply exceeding demand still exists
OPEC, led by Saudi Arabia, Crude oil production accounts for 40% of the world’s total production, and exports account for 50% of the world’s total. If the other 11 non-OPEC countries in OPEC+ such as Russia and Mexico are added, the crude oil production accounts for more than 60%, and the export volume accounts for more than 70%. %. It can be said that OPEC+’s decision to cut production has played a leading role in the rebound of crude oil several times in the past year. According to the agreement reached in April 2020, OPEC+ will still cut production by 5.7 million barrels per day from now to April next year. In the case of a supply gap in the international crude oil market, the above-mentioned decision of OPEC+ will still be a fundamental factor in the trend of crude oil.
Judging from the situation in recent months, although the organization increased production by 350,000 barrels in May and June and Saudi Arabia increased production by 600,000 barrels, global crude oil inventories have Overall, cuts are still happening at a rapid pace, which means supply still outstrips demand. After entering July, OPEC+ will increase production by 440,000 barrels, and Saudi Arabia will restore 400,000 barrels. However, the July-August futures contracts of WIT and Brent crude oil are generally at a premium of 5-6 US dollars per barrel compared with June, which means that the market believes that 7 If the current production increase plan is still maintained after this month, supply will become even tighter.
The net import volume of U.S. crude oil has increased
The U.S. factor is the The biggest variable in the crude oil market is also the most important factor leading to the crude oil price war. Due to the serious shortage of capital expenditure caused by the epidemic last year and the Biden administration’s tendency to restrict some offshore oil wells due to environmental concerns, it is difficult for the United States to significantly increase crude oil production in the rest of this year. Statistics from Baker Hughes show that as of June 11, the number of drilling rigs in the United States was only 461, less than half of the same period in 2018 and 2019; and data released by the EIA showed that in the week of June 11, the number of crude oil in U.S. oil fields Production was 11.2 million barrels, down 7% year-on-year; based on weekly data, U.S. crude oil production fell by more than 10% in the first five months of 2021; U.S. GDP in the first quarter rose to 6.4% at an annualized rate, and the unemployment rate fell in May to 5.5%, and as economic conditions improve, consumption of crude oil will steadily increase. According to statistics, the United States’ net crude oil imports in May were 3.21 million barrels per day, the second highest level since September 2019. At the same time, the refined oil inventory data released by the U.S. Department of Energy is also a strong evidence. As of June 11, gasoline inventories were approximately 243 million barrels, down 5% year-on-year, and inventories of kerosene, heating oil, distillate fuel oil and other oil products were 223 million barrels, down 16% year-on-year.
In addition, summer is the traditional peak season for gasoline and diesel consumption, and July to September this year will be an obvious stage of destocking oil products. By then, not only will the United States no longer “add obstruction” to crude oil bulls, but it is likely to become a “dark horse” in the crude oil consumption market in the second half of the year.
Don’t worry about Iran’s crude oil supply
Iran’s problem is the crude oil market this year An important starting point for short sellers, but judging from the current situation, because Iran insists that the United States should return to the Iran nuclear agreement “without adding anything and without reducing anything”, and the serious partisanship in the United States, the negotiations are progressing slowly. Even if the United States meets Iran’s conditions, it will take a long time to fulfill domestic approval procedures and resolve legal obstacles erected during the Trump administration. According to the latest news on June 17, the French Ministry of Foreign Affairs stated that there are still “major differences” in the negotiations on the Iran nuclear agreement. Therefore, it is expected that it will take at least several months before the parties can reach an agreement and lift the ban on Iranian crude oil exports.
In addition, even if Iran resumes exports, it is not as terrible as imagined. According to OPEC data, before Iran was sanctioned, its crude oil production peaked at around 3.8 million barrels per day, but it had returned to 2.5 million barrels per day in May, leaving room for future growth of 1.3 million barrels per day. Based on experience since 2015, it took Iran about a year and a half to increase from 2.8 million barrels in the month when the Iran nuclear deal was reached to 3.8 million barrels. In other words, at least in the second half of the year, there is basically no need to worry about the impact of Iranian crude oil on the market.
In addition to the above-mentioned main factors, the crude oil imports of my country and India in the second half of the year will most likely exceed market expectations. The author therefore believes that the crude oil market is still in a destocking cycle in the second half of the year, and the price has a lot of room for imagination. It is not completely impossible to rise to 90 US dollars per barrel. </p
