Oil prices have closed higher on five trading days in the past week, showing investors’ bullish sentiment towards oil prices. After OPEC took the lead in announcing its September monthly report on September 12, the EIA and the International Energy Agency followed closely and released their September monthly reports respectively. The three major institutions jointly confirmed that after Saudi Arabia and Russia voluntarily extended production cuts, the crude oil market will face supply shortage pressure. The difference is that there are certain differences in the degree of supply shortage. Various institutions have unanimous expectations for an increase in oil prices due to supply shortages, which has further boosted investors’ bullish sentiment on oil prices. With WTI crude oil also exceeding 90 US dollars per barrel, the crude oil market has once again entered a stage of high oil prices.
The strong pattern of oil prices is difficult to shake for the time being. Before sufficient negative factors accumulate, there is still room for improvement in the center of oil prices. However, at the same time, high oil prices will also bring inflationary pressure to the European and American markets again. The price of gasoline in the United States rose to the highest level in the same period in history. Gasoline prices It rose 7.8% in just eight weeks, a rare late-summer rally that poses a challenge to the Biden administration’s anti-inflation actions. In addition, the monthly reports of the three major institutions focused on the downward pressure on inventories caused by the supply contraction. The possible suppression of demand by high oil prices during the year was not considered. The demand side expectations of the crude oil market for the year were basically maintained. The EIA even raised the 2023 forecast. The annual crude oil market demand growth is expected to range from 50,000 barrels/day to 1.81 million barrels/day. In comparison, EIA is still the most conservative forecast of crude oil demand growth among the three major institutions. For 2024, the International Energy Agency and EIA, which are more inclined to represent the position of the demand side, have made relatively conservative forecasts. This is also a change that the subsequent market needs to pay attention to after the strong rise of crude oil. At present, although the supply of crude oil is tight, the downstream market is It is very difficult to digest strong oil prices. If downstream consumption is suppressed by high oil prices, the market may experience negative feedback again before the end of the year, which will also attract investors, including industrial clients, to sell on highs.
In its monthly report, OPEC stuck to its forecast for strong growth in global oil demand in 2023 and 2024, citing signs that major economies are performing better than expected despite headwinds such as high interest rates and high inflation. OPEC’s monthly report shows that world oil demand will increase by 2.44 million barrels per day in 2023 and 2.25 million barrels per day in 2024, both unchanged from the previous month. The International Energy Agency also maintained its judgment that oil demand will increase by 2.2 million barrels per day in 2023. However, the International Energy Agency is more cautious in its forecast for oil demand growth in 2024. It judges that the oil demand of the OECD is expected to enter a long-term decline stage next year, and China’s oil consumption will not increase due to the epidemic recovery next year, and will only have a matching economic growth level. needs. OPEC believes that China’s oil demand growth in 2023 will average an increase of 1.6 million barrels per day compared with last year. The International Energy Agency also maintains its global oil demand growth forecast in 2023 at a stable level of 2.2 million barrels per day, and in 2024 at a level of 1 million barrels per day. OPEC said in the report: “Continued global economic growth is expected to drive oil demand, especially given the recovery of tourism, air travel and stable driving. Total global oil demand will exceed pre-epidemic levels in 2023.” China Market high-frequency data shows that crude oil processing volume continues to climb to record highs. However, as oil prices rise, China’s crude oil imports have declined compared with the first half of the year. More refineries have begun to digest previously stored crude oil to alleviate the pressure of rising costs. At present, Seeing that China’s domestic refinery oil cracking spread has dropped significantly, refinery profits have been significantly squeezed. Whether the refined oil products in the Chinese market can match the strength of crude oil in the future will be a factor worthy of attention on the demand side.
The OPEC report also showed that although U.S. sanctions on Iran continue and Saudi Arabia voluntarily reduces production, driven by the recovery of Iranian production, OPEC oil production increased by 113,000 barrels per day in August to 27.45 million barrels per day, of which Iran and Nigeria saw the largest increases in production. Secondary data shows that Saudi Arabia’s crude oil production decreased by 88,000 barrels per day in August to 8.97 million barrels per day. Iran’s crude oil production increased by 143,000 barrels per day in August to 3 million barrels per day, after Iran previously said it would increase crude oil production to 3.4 million barrels per day as soon as possible. EIA expects U.S. crude oil production to increase by 870,000 barrels per day in 2023, from the previous 850,000 barrels per day. U.S. crude oil production is expected to increase by 380,000 barrels per day in 2024, from 330,000 barrels per day previously. U.S. crude oil production is expected to be 12.78 million barrels per day in 2023, compared with 12.76 million barrels per day previously. The latest EIA weekly report shows that U.S. domestic crude oil production increased by another 100,000 barrels to 12.9 million barrels per day in the week of September 8. U.S. domestic crude oil production in the week of September 8 was the highest since the week of March 27, 2020. Despite this, it is still difficult to fill the gap caused by the OPEC+ joint production cuts, especially the supply losses caused by Saudi Arabia’s extension of voluntary production cuts. Supply shortages in the oil market during the year will still be the current impact on oil prices.�The core factor is that the IEA monthly report showed that global observed oil inventories decreased by 76.3 million barrels in August, falling to the lowest level in 13 months. Further destocking in the context of low inventories will make the market very uneasy.
The latest position data shows that the U.S. Commodity Futures Trading Commission (CFTC) reported that in the week ending September 12, speculative net long positions in WTI crude oil increased by 27,185 lots to 252,219 lots, continuing to significantly set a new high for the year. Intercontinental Exchange (ICE) data showed that speculative net long positions in Brent crude oil futures increased by 19,980 contracts to 247,627 contracts last week. Following the sharp increase in net long positions, funds continued to allocate more to crude oil last week, which provided energy for the upward movement of oil prices, and oil prices continued to rise driven by this.
At present, there is limited room for external forces, including the United States, to strongly intervene in oil prices. The strong oil price situation is still difficult to shake for the time being. The follow-up focus will be on whether the inventory changes in the crude oil market will continue to cause market panic after supply tightening, and whether the refined oil market will continue to cause market panic. There will be continued weakness, which will have a significant impact on the pace of oil prices. As oil prices rise, intraday reversal fluctuations will become more frequent, such as last Friday night’s oil price retracement and then rebounded to close higher, so pay attention to the rhythm.
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