Xinhua News Agency, New York, March 19th, Financial Watch: The negative factors of the epidemic will still suppress international oil prices
Xinhua News Agency reporter Liu Yanan
Affected by news of possible US diplomatic intervention in crude oil's "price war", the price of West Texas Light Crude Oil futures delivered by the New York Mercantile Exchange in April soared by more than 20%. The previous trading day, the price had plummeted by more than 20%.
US President Trump said at a press conference on the 19th that he would intervene in the "price war" and the battle for output in the oil market at the right time. According to reports, US senators have pressured Saudi Arabia on the 18th to stop the "price war" and called on Trump to implement an oil embargo on Saudi Arabia and Russia.
Jefferies Group analysts said that if the "price war" continues, from April 1, about 4 million barrels of crude oil will flood the market every day, which may push oil prices below $ 20 per barrel. "No oil producer has benefited from the current situation."
Some analysts believe that the direct cause of the plunge in international oil prices is the "price war", but the measures taken by the world in response to the new crown pneumonia epidemic have indirectly curbed demand for crude oil, which has a greater impact on the trend of oil prices. Therefore, even if the United States is actively brewing to intervene in the "price war", it cannot avoid the impact of immunity on oil prices.
Market participants said that the 19th international oil price soared in the previous trading day after a sharp oversold and a technical rebound.
Jeff Kilberger, founder and CEO of KKM Financial Consulting, said the sharp rebound in oil prices on the 19th was due to the "rubber band effect." Kilberg said that prices are flexible, and the market trend that day was a rebound from the historical oversold of West Texas light crude futures in the previous trading day.
Scott Niesins, president and chief investment officer of the market research firm Niesens Stock Consulting, said that the relative strength indicator for predicting future market trends has fallen below 14, indicating that crude oil futures have been severely oversold, which is the largest he has ever seen. The lowest value encountered by the product. He said that the stimulus measures of the central banks of many countries and the zero new confirmed cases of new coronary pneumonia in China have boosted the overall market sentiment.
In a report released by the Austrian JBC Energy Consulting Company on the 19th, in addition to the breakdown of the production reduction agreement negotiations and the "price war" factors initiated by Saudi Arabia, the pressure of falling oil prices is now increasingly coming from the impact of the global spread of the new crown pneumonia epidemic. Epidemic control measures will significantly reduce the daily demand for aviation fuel.
International energy consultancy Wood McKenzie said on the 19th that as the plunge in oil prices continues, the oil and gas industry has entered a "survival mode." Since March 9, more than a third of the companies that the agency has followed have cut capital expenditures by 30%. If oil prices remain low, more efforts will be needed to cut spending.
Phil Flynn, senior analyst at Price Futures Group, said on the 19th that the current situation requires the global government to exert every effort to control the epidemic and save the economy.
As the energy industry is a highly indebted industry, many energy companies have large amounts of outstanding debt. Some analysts worry that with the continued decline in oil prices and the slump in the financial market, it may lead to a concentrated debt crisis in the energy industry, further increasing the risk of financial market volatility.