International oil prices have risen sharply recently. The main contract of Brent crude oil has been rising from a periodic low of US$65.720/barrel in December 2021. It once stood at the mark of US$88/barrel yesterday, with an increase of nearly 34%, once again refreshing the level of 2018. A new high since October. Driven by the external market, the main domestic crude oil contract 2203 also continued to rise, rising 2.45% yesterday to close at 543.4 yuan/barrel.
“The strong increase in international oil prices can be interpreted from two perspectives. One is that supply and demand expectations have improved significantly compared with the end of last year. At the beginning of December, the market was still worried that the crude oil market may have a substantial surplus in the first half of 2022. However, as time goes by, the Concerns about crude oil demand due to the Micron epidemic subsided, and during this period there were frequent speculations on the supply side. OPEC+ production was lower than market expectations, making the market worried about supply potential. Geographical events such as the Ukraine dispute and civil strife in Kazakhstan, as well as unstable production in Libya, Disturbance from other factors has made the market nervous. On January 18, a piece of news that the Houthi armed forces in Yemen attacked the United Arab Emirates caused oil prices to rise sharply. You must know that most of the time when the Houthi armed forces in Yemen attacked Middle Eastern countries, the market reaction was very dull, but now like this A piece of news can ignite the market, and it can be seen that the market sentiment is highly excited. Another factor is that speculative funds have massively increased their positions and long orders. In the context of the recent speculation in the crude oil market, speculative funds have repeatedly used this time window and actively entered the market. Pushing up oil prices, data shows that the speculative net long positions in Brent and WTI crude oil have both reached the largest increase in positions in more than two months.” said Yang An, head of energy and chemical research and development at Haitong Futures.
According to Yu Pengsen, an energy researcher at Zhaojin Futures, the current production restriction policy maintained by Saudi Arabia and other OPEC+ has caused the supply to exceed demand in the international crude oil market. U.S. crude oil inventories continue to decline, and global crude oil inventories have not increased, causing the international community to have doubts about the future crude oil market. supply concerns. Coupled with the rising risk aversion caused by geopolitical crises in Kazakhstan and Ukraine, the purchase of crude oil has once again aroused interest in the capital market.
Many well-known international investment banks, including Goldman Sachs, have also raised their expectations for international oil prices. Goldman Sachs released a report stating that solid fundamentals have reversed last year’s decline in oil prices. Since the impact of the Omicron variant on demand is far less than that of the Delta strain, the market still has an unexpectedly large supply gap. Goldman Sachs raised its Brent crude oil spot price forecast for the third and fourth quarters of 2022 by US$20/barrel to US$100/barrel; it raised its 2022 price forecast from US$81/barrel to US$96/barrel; at the same time, The Brent oil price forecast for 2023 has been raised from US$85/barrel to US$105/barrel.
It should be noted that Saudi Energy Minister Prince Abdulaziz bin Salman said on Monday that although the spare capacity of the Organization of the Petroleum Exporting Countries (OPEC) is becoming increasingly tight, the Kingdom does not intend to produce more than its quota. of crude oil to make up for the production shortfall of OPEC members.
“At present, it seems that OPEC+ has fully tasted the sweetness of controlling supply. Under the current high oil price situation, its position is very favorable. Therefore, OPEC+ is not in a hurry to accelerate production increase, but will try to keep oil prices at a relatively high level to increase production. own income. In addition, increasing production according to OPEC’s own assessment will cause the risk of excess in the crude oil market, which is not in its own interests.” Yang An said.
According to Yu Pengsen, this statement shows that Saudi Arabia has always been worried about the global epidemic. “OPEC and EIA also have differences in their supply and demand expectations for the market outlook. EIA believes that global crude oil will not reach a balance between supply and demand until after September 2022. Before that, supply will continue to exceed demand. Saudi Arabia and other OPEC countries believe that global crude oil supply and demand will be balanced at It will be reversed in January 2022 and will enter the period of accumulated storage from March to April. Therefore, Saudi Arabia has always maintained a relatively cautious attitude towards increasing production.” He said that in addition, the storage behavior of the United States and South Korea in response to rising oil prices has also triggered It has met the dissatisfaction of Saudi Arabia and other countries and believes that this is destroying the normal balance of the oil market. Therefore, the increased supply due to storage should be reduced through production restrictions.
Recently, geopolitical conflicts have continued. In this regard, Yang An believes that geopolitical risks will become an important factor affecting the market in 2022.
“Only half a month into the new year, multiple geo-risk events have occurred, and without exception they have pushed up oil prices. The market is highly sensitive to this factor. As oil prices rise, the game between major countries, supply The interest game between the core members of the end and consumer end will further intensify, and geopolitical conflicts are likely to escalate, which will further increase investors’ concerns about supply stability and pose the risk of pushing up oil prices.” Yang An said.
Yu Pengsen believes that there is still a lack of effective means to deal with the current geopolitical conflicts in the world. NATO’s eastward expansion and Ukraine issues have been long-standing and cannot be solved in a few days of negotiations. The implementation of OPEC+’s established steps to increase production has always been relatively slow. It is slow and has not achieved the expected effect, which will push oil prices to continue to rise.
However, geopolitical factors are short-term effects. Yang An believes that looking forward to 2022, it will be difficult for the crude oil market to experience a sharp decline in inventory like last year. From the comparison of the recovery potential on the supply side and the increase in demand, there is a high probability that the crude oil market will still be A surplus situation occurs, even if there are some unconventional factors on the supply side that cause the increase to be less than expected, the crude oil market in 2022 should also be in a tight balance stage. Therefore, the recent strong performance of oil prices based on geopolitical and other speculations may continue to rise. The mid-term outlook should still be relatively cautious. Once the oversupply and demand expectations are realized in the later period, oil prices will risk falling back.
“It should be noted that the uncertainty of the global epidemic and the uncertainty of supply and demand are still affecting the judgment of the entire market. It is very difficult to judge whether there are good and bad things at the same time. Taken together, oil prices are in an effective supply situation Before it eases, there is still the possibility of rising higher, but the upward pressure will be increasing. The United States will weigh a series of issues caused by high oil prices and is very likely to introduce measures to suppress it again. The world’s major oil-consuming countries will also take measures With certain countermeasures, our country will also release national reserves of crude oil before and after the Spring Festival, which are all factors that will suppress oil prices in the future,” Yu Pengsen said.
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