China News Service Client, Beijing, April 22 (Zhang Xu): "It may be necessary to post a loss of crude oil." On the 20th and 21st, the epic plunge in international oil prices was more stimulating than the previous oil price war.
US oil fell to single digits, cabbage prices are 8 times that of crude oil
On the 20th, international oil prices plummeted, and the May WTI crude oil futures contract on May 21 fell sharply by more than 300% to -37.63 USD per barrel, setting a record for the first time in history. On the 21st, international oil prices collapsed again, and it was the main contract that collapsed. "It seems to be testing how deep the seabed is?"
On the 21st, the main contract of the US WTI crude oil futures plunged nearly 65%, the lowest reported at 6.47 US dollars / barrel, the lowest since 1988, and finally closed at 13.15 US dollars / barrel, a drop of 35.63%; Brent crude oil futures main contract once plummeted Over 30%, the lowest reported at $ 17.51 / barrel, the lowest since 2004, the decline at the close narrowed to 23.74%, reported at $ 19.50 / barrel, failed to recover the $ 20 mark.
WTI crude oil futures 06 main contract trend. Data source: Straight Flush
Investors who changed the main contract of WTI crude oil futures from month to June did not expect to be able to "escape". The paragraph where crude oil plummeted has also become active. Some people said online, "When I wake up, I owe hundreds of thousands of dollars to the bank", "Because of the long crude oil futures burst, the house is in desperate need of a shot", and even people can't bear to look directly at the paragraph dialogue. Such as:
Crude oil: Living without self-esteem is simply the price of cabbage ...
Cabbage: You dare to compare with me (a disdain)?
Crude oil: Can I always compare with water?
Shui: Dude, am I also more expensive than you?
International crude oil is usually summarized in barrels. Based on the world's average weight of Arab 34-degree light crude oil, the volume of crude oil per barrel is approximately equal to 159 liters and 7.33 barrels per ton of crude oil.
According to the conversion of 1 barrel of crude oil = 159 litres = 6.47 US dollars, 1 barrel of crude oil = 45.78 yuan (exchange rate of 1 US dollar = 7.0752 yuan), 1 ton of crude oil = 7.33 barrels = 47.43 US dollars = 335.58 yuan.
The average price of Chinese cabbage in the Beijing Xinfadi Market on the 21st is 2.7 yuan / kg, and 2700 yuan per ton of Chinese cabbage; ordinary bottled mineral water is generally 1 bottle of 0.55 liters, calculated at 2 yuan / bottle, 1 barrel of mineral water ( 159 litres) = 578 yuan. Chinese cabbage and mineral water are significantly more expensive than crude oil.
Why has international oil prices plummeted?
——The demand drops sharply, there is no place to put too much oil
Since the WTI crude oil futures contract expires on the 21st and is no longer the most actively traded contract on the 20th, the negative oil price does not accurately reflect the current oil price. But the plunge of the main contract on the 21st caused market concerns.
Yan Jiantao, deputy general manager of Longzhong Information, told reporters that the most important factor currently affecting oil prices is not production cost, but inventory. The epidemic caused problems such as poor infrastructure and transportation and logistics, and crude oil was difficult to export or store.
The epidemic continues to spread, leading to a sharp reduction in global oil demand. The International Energy Agency (IEA) predicts that this year's global oil demand will record a record reduction of 9.3 million barrels per day, of which demand in April decreased by 29 million barrels per day, falling to the lowest level since 1995.
A number of industry experts pointed out that the demand and supply of crude oil have little elasticity in the short term. Although crude oil reserves can stabilize the market to a certain extent, global oil storage equipment is rapidly being filled. "The world's largest oil storage capacity is about 6.8 billion barrels, of which nearly 60% has now been filled."
On the 21st, Royal Vopak NV, the world's largest independent oil storage company, said that the epidemic caused an oversupply in the oil market, and traders almost ran out of space to store crude oil and refined fuel.
Many investors rented oil tankers to store crude oil during the 2008 financial crisis when crude oil was at a very low price, as long as the price of oil rose by more than the cost of rent, they could profit. However, 160 million barrels of oil are currently stored on cruise ships around the world. If the price of oil cannot recover, investors will have to bear the costs of transportation and cruise warehousing after physical delivery.
The picture shows the staff of Fuzhou gas station on February 5. China News Agency reporter Wang Dongming
Why did Meiyou fall even worse, even showing negative values?
——The cost of warehousing is too high, and the manufacturer would rather sell it instead
"WTI crude oil futures price is a price in North America, which is always lower than Brent oil prices." Some industry analysts said that WTI crude oil in the United States is a delivery oil that is more localized than the United States. Affected by the local inventory, it is also related to the delivery mechanism.
WTI crude oil futures are mainly physical delivery. In addition to using pipelines and storage tanks for delivery, EFP is also a common method in WTI delivery, but it does not include cash delivery. The Brent crude oil futures settlement is more flexible, most of which are based on the Brent index price one day after the last trading day for cash settlement, or the option of period cashing (physical delivery) to settle the position.
"After the bulls get the goods, they need to pay for the cost of finding storage tank resources and handling the crude oil spot at hand. This is the fundamental reason for the existence of negative oil prices," said Gu Shuangfei, an analyst at South China Futures Energy.
Rystad Energy said that the Oklahoma State Cushing (WTI crude oil futures delivery site) inventory can hold 80 million barrels of oil, less than half of the reserves in February this year. But Cushing ’s free storage is now only 21 million barrels, and is expected to fill up in May.
These figures mean that traders will soon have insufficient space to store crude oil. If you do not close out the WTI crude oil futures May long contract, it is difficult to go to Cushing to find oil storage space when you receive the crude oil spot at the time of delivery.
"Affected by the epidemic, in the inland oil producing areas of the United States and Canada, the crude oil produced cannot be shipped out, the storage capacity is insufficient or the storage cost is too high. The producers would rather sell it in reverse, and the negative oil price will appear. The cost of shutting down oil wells is higher than the loss of production, which can only be the lesser of the two evils. "Yan Jiantao said.
Oil prices are all negative, can't they sell? Gao Xinwei, a professor at China University of Petroleum, said in an interview with the media that oil is a dangerous chemical. It is not like milk or beer. The excess can be discarded. If the traders are not allowed to take the money away, improper storage will easily lead to security accidents or pollution, and the compensation will be higher than the price of $ 37, so it is not acceptable not to sell.
Where to go for oil prices
-Will Brent crude oil fall to single digits?
More than 65% of global crude oil and downstream oil products are priced by the Brent system. Brent crude oil is the world's most extensive crude oil pricing benchmark.
After WTI crude oil futures fell to $ 6.47 / barrel, Brent crude oil also fell below the $ 18 / barrel mark. Some people have begun to worry whether Brent crude oil will fall to single digits.
London Brent crude oil futures daily K-line chart. Data source: Straight Flush.
Earlier, after the OPEC + historic production reduction agreement was reached, Citi Global Commodity Director Ed Morse wrote in a report to customers: "Now we want to prevent the increase of over 1 billion barrels of ultra-large inventory from mid-March to the end of May. , It ’s too late to stop spot prices falling to single digits. "
OPEC + production cuts will start on May 1. According to foreign media reports on the 22nd, the UAE Energy Minister said that as soon as the OPEC + agreement begins to be implemented, oil prices will stabilize and have confidence in OPEC member countries to restore trust in OPEC +.
Paul Horsnell, head of Standard Chartered's commodities business, believes that crude oil exploration companies shut down 13% of the US's drilling capacity last week. Although the pace of production cuts in the US is accelerating, it is not fast enough to avoid reaching the maximum level of storage.
Goldman Sachs believes that under the influence of sharp fluctuations in oil prices, the shocked bulls may choose to withdraw; the impact of negative oil prices will continue, causing the bulls to be affected in the contract extension from June to July; the excess crude oil is still unresolved and will continue to The storage capacity will be impacted in the coming weeks. (Finish)