Since July, affected by various factors, international oil prices have fluctuated significantly, and market risks have increased. In order to further understand the risks that the market may face in the future and help relevant companies actively respond, Shangjian Energy recently jointly held a global crude oil market seminar with China Petroleum International Co., Ltd. and Bank of China International, and invited domestic and foreign experts to discuss the global crude oil market in the future. Changes in supply and demand in the market.
Participants believed that under normal circumstances, crude oil supply will not increase significantly in the short term, and the market will still be dominated by destocking in the second half of the year. However, considering that the epidemic, extreme weather and policy changes will bring certain uncertainties to the market, market participants said that it is necessary for relevant companies to make arrangements in derivatives in advance to reduce the impact of market fluctuations on daily operations of companies. .
The market in the second half of the year will still be dominated by the logic of de-banking
For the near future Oil prices fluctuate sharply. According to Gui Chenxi, a crude oil researcher at CITIC Futures, as demand continues to recover rapidly, oil prices rose sharply to high levels in the early stage. As the pressure from above gradually increases, the short-term long-short game has intensified.
Jing Chuan, deputy general manager and chief economist of Wuchan Zhongda Futures, said that global economic development is facing new uncertainties, the arrival of the global traditional consumption peak season, policy intervention and market expectations. The rapid switching, etc., has led to large fluctuations in commodities including crude oil recently.
The outstanding performance of crude oil is related to the recent spread of new coronavirus strains (Delta, Lambda) around the world, which has triggered market concerns that blockade measures will drag down the global economic recovery process. The OPEC+ production increase plan reached earlier will most likely not be revised in the short term, and the risk of crude oil supply and demand turning from a slight shortage to a slight surplus has increased. In addition, the third batch of domestic import quotas has not been released, resulting in quota shortages at some domestic refineries and intensifying market concerns about relevant policies. Under such circumstances, international crude oil prices fluctuated violently.
However, participants believed that the impact of the epidemic on oil prices is relatively limited, and the crude oil market will still be dominated by destocking during the year. Li Yunxu, senior analyst at SDIC Essence Futures, believes that at present, major developed economies such as Europe and the United States have strong confidence in epidemic prevention against the backdrop of high vaccination rates and sharp declines in death and severe disease rates, and have not taken any measures in response to the Delta virus. Massive lockdown measures.
Generally speaking, the direct impact of the epidemic on crude oil demand is mainly reflected in the suppression of refined oil consumption due to travel restrictions. Since the beginning of this year, as the focus of epidemic prevention in major economies has gradually shifted from blockade and isolation to vaccination, consumption of oil products, represented by gasoline and jet fuel, has steadily rebounded. Although the local emergence of the Delta variant virus has led to a short-term decline in domestic demand, considering that my country has rich experience in epidemic prevention, there is a high probability that the epidemic will be gradually controlled and the impact will be relatively limited.
Li Yunxu told reporters that although global flight activities have decreased significantly recently, people in major foreign economies still travel relatively smoothly, and refined oil consumption in countries such as the United Kingdom and the United States has not changed with the epidemic. rebounded and fluctuated sharply. The relevant research models of the participants showed that the Delta variant virus only caused a slowdown in the slope of demand growth.
Fu Xiao, head of global commodity strategy of Bank of China International, said at the meeting that as time goes by, the impact of the epidemic on global crude oil demand and other issues continues to decrease. Research by Martijn Rats, global head of commodity trading at Morgan Stanley, shows that although the epidemic has recurred recently and some countries have once again adopted blockade measures, which has had a certain impact on crude oil demand, relevant data shows that the current global traffic is still on an upward path. , global crude oil inventories are also rapidly decreasing by 1.2 million barrels per day.
Considering that in order to maintain market share and profits, OPEC+ will most likely not modify its production reduction plan in the short term. At the same time, U.S. shale oil productivity is declining, and its production growth is relatively slow amid changes in upstream investment logic. Because of this, Natasha Kaneva, head of global commodity trading strategy at JPMorgan Chase, believes that global crude oil supply will remain tight in the second half of this year. Against the backdrop of recovery in demand for oil products, it is in a destocking cycle caused by OPEC+’s cautious increase in production. Experts attending the meeting generally believed that international oil prices are likely to oscillate at a high level in the second half of the year.
Relevant enterprises should comprehensively use a variety of derivatives to prevent and control risks
Although the international crude oil market is still in a destocking cycle in the second half of the year, and prices are mainly affected by changes in demand, guests at the conference expected that changes in the macro level and supply side in the second half of the year will have a greater impact on the market.
On the supply side, U.S. shale oil production is likely to recover slowly due to factors such as well depletion, changes in upstream investment logic, and the approaching peak of the Atlantic hurricane season. However, once Iran reaches a settlement with the United States, its output may rise rapidly, which will affect crude oil prices. Therefore, the Iranian issue will become one of the factors that the market needs to focus on in the second half of the year.
In addition, the bull market in crude oil in the first half of the year is not only related to the continued recovery of demand for oil products, but is also the result of quantitative easing by global central banks to a certain extent. Therefore, once the monetary policies of major economies such as the United States show signs of tightening in the second half of the year, crude oil prices will inevitably fluctuate again.
The main factor affecting international oil prices in the past two years is the supply side. In the global economyIn the case of out-of-synchronization, there have been major changes recently. Market participants said that with the slowdown in domestic economic growth and the gradual recovery of economies such as Europe and the United States, global crude oil demand will show a “strong in the west and weak in the east” pattern in the second half of the year.
Relevant data show that driven by the rapid economic recovery recently, oil demand in Europe and the United States has recovered steadily. U.S. oil demand has remained above 2 million barrels per day for four consecutive weeks and has returned to normal. level; French gasoline and road diesel demand in June increased by 13% and 2% respectively compared with the same period in 2019. In Southeast Asia, as the daily number of new cases in Indonesia, Thailand, the Philippines and other countries continues to rise, the recovery of oil demand is relatively slow. India’s oil demand increased to 4.4 million barrels/day in June, with gasoline and diesel demand increasing by 140,000 barrels/day and 210,000 barrels/day respectively month-on-month.
my country has recently seen another local epidemic, and control measures have been upgraded in many places. It is expected that the demand for gasoline, kerosene and oil will be affected to a certain extent. The previous floods in the central region also had a certain impact on short-term demand. In the next few months, my country’s crude oil imports are expected to slow down significantly in view of the sharp decline in crude oil import quotas for local refining and refined oil export quotas.
However, considering that the peak demand season in the United States is about to pass and the peak of the Atlantic hurricane season is approaching, there is a high probability that crude oil supply and demand will be affected to a certain extent. Therefore, participants generally believed that although the crude oil market is still in the destocking stage in the second half of the year, oil price fluctuations will intensify given the many disturbing factors in the market.
Gui Chenxi said that comprehensively, not only the crude oil procurement risks of domestic refining and chemical companies will increase, but downstream refined oil consumption companies will also face the risk of cost fluctuations. However, considering the recent tightening of local refinery quotas and the slowdown in procurement, Li Yunxu believes that traders will be under relatively greater pressure in the coming period, especially the rapid decline in oil prices, which will have a greater impact on traders with greater risk exposure.
In view of this, Gui Chenxi suggested that upstream crude oil production companies can learn from Pemex’s operating model and choose opportunities to sell and maintain value within an acceptable range where crude oil prices are higher than costs. , lock in selling profits. As for downstream demand companies, if they believe that the current oil price is at a relatively high level, they can gradually reduce the proportion of buying and hedging, and resume hedging operations after oil prices enter an upward cycle again. Li Yunxu said that when processing profits are acceptable, downstream processing companies can also use the hedging combination of PTA and crude oil, asphalt and crude oil to lock in processing profits.
Gui Chenxi believes that traders who are under greater pressure in terms of crude oil or refined oil inventories can actively use Shanghai crude oil futures to hedge their inventories. The deliverable characteristics of futures can also be used to optimize profits in the futures and spot markets.
It is understood that this year, when the market conditions are suitable, China Petroleum International Co., Ltd. has successively taken delivery of energy from the previous period and delivered goods to the designated delivery warehouse for energy from the previous period. Its procurement and sales channels are optimized and, as a result, higher profits are achieved.
As for the domestic aviation market, which has been most affected by the epidemic recently, Yue Peng, manager of the Investment Consulting Department of China Eastern Airlines Futures and specialist of the Hedging Research Office of China Eastern Airlines, said that because airlines need to guard against jet fuel The risk of a sharp increase in purchase prices. Considering that oil prices are generally at a relatively high level, it is not the best time for airlines to participate in hedging at this time.
For companies that sell crude oil, he believes that high price opportunities can be used to lock in sales profits, just like the hedging actions taken by U.S. shale oil companies. However, the basic disciplines of hedging must be observed, which is to keep an eye on the spot, control the hedging ratio, and try to choose simple and effective hedging tools.
In Jingchuan’s view, if this round of epidemic does not cause a serious drag on the economy, oil prices are likely to have a V-shaped trend. Under such circumstances, companies can choose to buy at relatively low prices. Invest in call options to protect against the risk of future price increases. According to reports, Southwest Airlines, as the third largest airline in the United States, has been able to maintain continuous profits despite the sharp fluctuations in crude oil prices over the past 50 years, mainly because it has locked in oil prices through futures contracts and options insurance for many years. This habit has repeatedly prevented us from facing tail risks. </p
