China News Service Client, Beijing, June 3 (Zhang Xu) With the gradual recovery of global demand and the market's expectation that oil-producing countries will extend their production cut agreements, international oil prices have continued to rise. On June 3, Beijing time, the price of Brent crude oil broke the $40/barrel mark, the first time since the outbreak of the international crude oil price war in early March.
Crude oil futures rose to a record high in May
In May, the international crude oil market ushered in the largest monthly increase in history. US WTI crude oil futures rose 85.02% this month, stabilizing to above $30; Brent crude oil futures also rose 41.07%.
Jin Zhengchuang crude oil analyst Han Zhengji told reporters that in terms of gains alone, the rise in international crude oil futures in May was the largest single-month gain since record. "Taking WTI crude oil futures as an example, the last recorded monthly increase was September 1990, when it rose 44.6%."
Brent crude oil futures are back at $40. Data source: Yingwei financial situation
In June, the upward trend of international oil prices has not stopped. As of press time, the price of London Brent crude oil futures rose 1.34% to $40.10 per barrel; WTI crude oil futures also rose 2.09% to $37.58 per barrel.
The industry believes that the Organization of Petroleum Exporting Countries crude oil production fell to its lowest level in 20 years, driving oil prices up. In addition, as more countries get rid of the new coronary pneumonia epidemic blockade, crude oil demand is expected to recover, and oil prices have room to rise.
Economic recovery boosts demand
Economic recovery has driven up oil prices, and good news has also been reported on the development of new coronavirus vaccines. Novatech, a biotechnology group, said it has recruited the first batch of volunteers for a phase 1 clinical trial; Merck & Co. is planning to develop two different new coronavirus vaccines.
Recently, countries and regions such as Europe and the United States have gradually started to resume production. Germany, Spain, Greece and other countries have announced that they will liberalize entry and exit travel restrictions. The global market is optimistic about the economic recovery expectations, superimposed on the implementation of the easing policies of major central banks, and the stock market and commodity markets are relatively active.
Earlier, Fed Chairman Powell said that the US economy will enter a "V-shaped recovery" stage. Dallas Fed Chairman Kaplan said the US economy has bottomed out and is expected to grow in the second half of this year and 2021. In addition, the European Commission proposed a 750 billion euro fiscal stimulus package, which strongly boosted market sentiment.
In the Asia-Pacific region, the economic recovery of China, a major oil consumer, has also injected vitality into the crude oil market. In May, the manufacturing PMI was 50.6%, which remained in the boom range. Domestic demand picked up, which led to an increase in crude oil demand. Energy consultancy Wood Mackenzie expects that China’s crude oil demand will recover to 13 million barrels/day in the second quarter of this year, an increase of 16.3% from the first quarter; China’s crude oil demand in the second half of the year will rise by 2.3% compared to the second half of 2019. 13.6 million barrels per day.
The effect of crude oil production reduction appears
On the supply side, OPEC and non-OPEC oil-producing countries decided in April to implement a reduction agreement on May 1st to reduce the average daily output of 9.7 million barrels. In May, Saudi Arabia agreed to reduce production by an additional 1 million barrels per day from June 1, and other OPEC member states such as Kuwait and the UAE also indicated that they would make additional production cuts.
Judging from the production cuts in May, OPEC member states that have undertaken the obligation to reduce production have achieved a 74% reduction in production commitments, and have not yet reached a full implementation rate. According to statistics from the energy consulting agency JBC, OPEC's oil production in May fell by 6.3 million barrels per day to 23.75 million barrels per day.
Stephen Innes, chief global market strategist at AixiCorp, said, "As long as OPEC+ continues to implement the current production reduction policy, oil prices are expected to stabilize at a high level."
The reduction in US crude oil production also supported oil prices. According to data released by American oil service company Baker Hughes, as of May 29, the total number of oil drilling decreased by 15 to 222, recorded 11 consecutive declines, continued to brush the lowest level in the past 11 years; the natural gas that week The total number of drilling decreased by 2 to 77; the total number of drilling decreased by 17 to 301. American drilling companies cut oil and gas rigs for three consecutive months, and cut oil and gas rigs to the lowest level in history for four consecutive weeks.
Rystad Energy released a report predicting that US oil production will bottom out at 10.7 million barrels/day in June, which will be the lowest in two years. Analysts said that monthly output is unlikely to exceed 11.7 million barrels per day by 2022, and crude oil output will be about 11.1 million barrels per day by the end of this year. This figure was at a record high of 13.1 million barrels in the first half of March.
The picture shows the staff of Fuzhou gas station on February 5. China News Agency reporter Wang Dongming
Domestic oil prices may end "five consecutive adjustments"
According to the National Development and Reform Commission news on May 28, as of May 27, the average price of crude oil in the international market for domestic refined oil prices in the first 10 working days was less than US$40 per barrel. According to the relevant provisions of the "Petroleum Price Management Measures" and "Oil Price Regulation Risk Reserve Collection Management Regulations", the price of gasoline and diesel will not be adjusted this time, and the unadjusted amount will be fully included in the oil price regulation risk reserve, and will be fully turned over to the central treasury.
The reporter found that as of now, since the trigger of the floor price mechanism, domestic refined oil prices have not been adjusted five times in a row, but this status quo may be broken by rising international oil prices.
A new round of domestic oil price adjustment windows will open at 24:00 on June 11.
Long Yan Information crude oil analyst Li Yan told reporters that this round of refined oil price adjustments due to the recent international oil prices continue to rise, there is indeed a chance to continue to strand and then increase again. At present, the international oil price to which the price adjustment mechanism is attached is still below US$40 per barrel, but there are still 6 working days in the current cycle. If the international oil price continues to rise, there is a possibility of breaking through the floor price constraint.
Looking ahead, Li Yan believes, "The rise in international oil prices has continued since May. At present, favorable factors in the market are prevailing, OPEC + production reduction is progressing smoothly, and demand in Europe and the United States is steadily recovering. If the overseas epidemic situation and international trade relations have not deteriorated, then Recent oil prices are expected to maintain a positive outlook."
Han Zhengji also said that after the Brent crude oil futures surpassed the $40 mark during the session, in general, it is possible to resume price adjustments in this round.
"The current OPEC meeting is approaching, and the results of the meeting will have an impact on oil prices. If the current production cut agreement can be continued, then oil prices may maintain an upward trend, but if production cuts are tightened, oil prices may face a correction. On the other hand, according to previous years, the current The United States has entered the peak period of fuel demand, and the demand for crude oil in the later period is also expected to bring benefits." Han Zhengji said. (Finish)