Crude oil prices continued to rise in the first week of 2021, with a weekly increase of 9%, and the Changyang line has formed an effective breakthrough. After the technical indicators showed signs of peaking, a piece of news from Saudi Arabia just pulled the price back into the upward trend. The short sellers’ desire to suppress oil prices was further frustrated, and the long positions waiting for the short positions also lost the opportunity to enter the market at a low price.
The facts of the epidemic cannot match the expectations of the vaccine
Purely from the data point of view, the global epidemic situation It is still in the fermentation stage, and the number of new confirmed cases is still reaching new highs. However, based on the market view, the market’s attitude towards the epidemic is consistent with Trump’s, and they are basically indifferent. The facts of the epidemic completely cannot compare with the expectations of the vaccine.
From a data perspective, as of January 7, there were 795,000 new confirmed cases in a single day worldwide, setting a new high again, with a total of 88.5 million confirmed cases worldwide. In terms of regions, Asia has added 88,000 people, and the number of new confirmed cases has been declining recently. Europe has added 275,000 people, which has remained at a high level recently. Africa has added 37,000 people. The recent trend shows signs of accelerating. The number of new diagnoses in America has been declining. With an increase of 430,000, it is still the main force in new cases worldwide. Among them, the mutated virus in the UK has begun to spread in other parts of the world. Even China, which has extremely strong prevention and control measures, has not been spared. The number of new cases in the UK in a single day in recent days has been around 60,000. You must know that the total population of the UK is only 60 million people. The number of new confirmed cases in the United States has reached 270,000, still setting new highs.
In terms of vaccination, European countries have different speeds and chaos has occurred. At present, 1.3 million people have been vaccinated in the UK, 300,000 people in Germany, and only 23,000 people have been vaccinated in France, accounting for only 40,000 of the total population. France currently receives nearly 100,000 frozen vaccines every day. However, due to the slow pace of vaccination and the lack of -80°C ultra-low temperature storage and transportation refrigerator equipment, more than 30% of the vaccines are currently in danger of failure. The Netherlands has received nearly 300,000 vaccines, but so far it has not received a single shot. The reason is that it does not have an ultra-low temperature refrigerator. We all know that although Pfizer’s vaccine is effective, the storage conditions are extremely harsh and needs to be stored at a temperature of -70°C. Currently, it not only faces the problem of production capacity constraints, but also faces the dilemma of being unable to vaccinate after production, such as France, the Netherlands, etc. Relatively developed countries are unable to achieve large-scale storage, transportation and vaccination. One can imagine the situation in other developing countries.
Just when European vaccination has not yet reached a final conclusion on its effectiveness and safety, there is another discouraging news, that is, the existing Vaccines such as those from Pfizer and Oxford may not be effective against variants, especially the South African variant. What is even more worrying is that as the new coronavirus epidemic continues to spread in Europe and around the world, the international medical community has discovered a new unknown virus in Africa that is more deadly than the new coronavirus.
The above analysis does not mean that crude oil prices will definitely fall, but that the future demand prospects will still be greatly restricted, just like the current epidemic is still very serious, but the market Not many investors in China are paying attention to the epidemic. Crude oil prices are still rising in the face of new global cases that continue to hit new highs. The expectation of vaccines has resolved the bad facts. If the vaccine is proven to be effective in the future, crude oil prices will continue to move forward on a strong basis. If the vaccine is proven to be ineffective in the future, then the rising foundation built by the vaccine will collapse. This is what we need in the future trading process. Variables to keep an eye on at all times.
Saudi Arabia once again turns the tide at the critical moment
Just when the bulls are hopeless On this occasion, Saudi Arabia’s timely support helped bulls break through successfully. In the recent OPEC meeting, Saudi Arabia once again took the initiative to take on the arduous task of stabilizing oil prices and will voluntarily reduce production by 1 million barrels per day from February to March. Saudi Arabia would rather sacrifice market share to push oil prices above $60 per barrel. , oil prices did not disappoint Saudi Arabia’s efforts. The 5% surge in a single day allowed the price to easily break through the upper pressure level, and the market pressure was once again resolved.
OPEC+’s efforts have always been the basis for the stable upward movement of crude oil prices. Saudi Arabia’s voluntary production reduction of 1 million barrels this time has brought its post-production production to 8.49 million barrels per day, which is consistent with In the first stage, the lowest oil prices were basically consistent. The market also saw Saudi Arabia’s determination to push up oil prices, and its short-selling willingness was once again frustrated.
Due to optimism, major institutions have raised their expectations for crude oil. Market opinions seem to be more unified. Crude oil prices will still have some room to rise in 2021. Among them, UBS raised its Brent crude oil price forecast to US$60/barrel by mid-2021; Standard Chartered Bank said that Saudi Arabia significantly unilaterally reduced production in the first quarter, raising the lower limit of oil prices and lowering the price of Brent crude oil in 2021. The forecast is raised by US$7/barrel to US$51/barrel, and the forecast in 2022 is raised by US$7/barrel to US$59/barrel; TD Securities expects WTI crude oil and Brent crude oil to trade above US$50/barrel and US$55/barrel ; Bank of America� said that due to increased confidence in recovery, Brent crude oil prices are expected to be US$50/barrel this year and US$55/barrel respectively in the next two years; Goldman Sachs said that Saudi Arabia’s reduced oil supply may support oil prices in the coming weeks, reiterating its bullish view on oil prices .
In addition, we need to pay special attention to the trends in Iran. Trump still has the last ten days to launch an attack against Iran. Although after the US demonstrators stormed the US Congress , Trump immediately stated that there would be a smooth transition, but on some occasions, Trump sent out a signal of no compromise. Judging from various signs, Iran will definitely not be peaceful recently. After Iran seized a South Korean ship, market tensions have begun to heat up significantly. A large number of Iranian warships have also begun to gather in the Strait of Hormuz. At the beginning of the new year, the market will Geopolitics will not push up oil prices again like in 2020, and it is still a potential risk point.
In addition, Biden’s coming to power is already a certain event, and the two Democrats After winning the Georgia Senate election and Democrats gaining control of both houses of Congress, there is a policy basis for further increasing the anti-epidemic relief fund, and the stimulus package appears to be quickly approved, which is expected to provide sufficient economic relief, Goldman Sachs The U.S. GDP growth forecast for the first quarter of this year has been raised to 5.0% from 3.0% previously, which is enough to illustrate the market’s huge expectations for Biden after taking office.
Overall, the crude oil market still has upward momentum. Saudi Arabia supports oil prices, vaccines support the recovery in demand, inventories continue to decline, and the United States continues to drain the dollar. Against the background of weakness, we predict that prices will most likely exceed the important mark of $60/barrel in the future. But in the short term, potential callback risks still exist, so without a good early entry point, investors still need to wait for market opportunities. </p
