In the early morning of December 4, Beijing time, the 12th OPEC and non-OPEC ministerial meeting concluded and issued a communiqué. The key points of the communiqué are as follows: 1. Starting from January 2021, member states have decided to voluntarily adjust the production reduction from 7.7 million barrels per day to 7.2 million barrels per day, which means an increase of 500,000 barrels per day. 2. OPEC and non-OPEC ministerial meetings will be held monthly starting from January 2021 to assess market conditions and decide on further adjustments to production next month, with monthly adjustments not exceeding 500,000 barrels per day; 3. Compensation production reduction period It will be extended until the end of March 2021 to ensure that all participating countries are fully compensated for excess oil production.
In addition, Saudi Arabia stated that it will continue to serve as co-chair of the OPEC+ Joint Production Cut Supervisory Committee (JMMC). Russian Deputy Prime Minister Novak concluded his speech at the OPEC+ meeting by saying that OPEC+ will allocate proportionally the plan to gradually increase oil production. The crude oil market is now in a relatively balanced state, allowing OPEC+ to relax oil production cuts. OPEC+’s adjustment to oil production policies may be In any direction (possible increase or decrease in production); Russia and Saudi Arabia will hold a bilateral meeting in late December. Russia can increase oil production by 125,000 barrels per day in January next year. Russia will comment on the production reduction agreement in November. The execution rate is close to 100%.
During yesterday’s daytime trading session, the main SC crude oil contract rose slightly, closing at 286.8 yuan/barrel, an increase of 2.1 yuan/barrel, an increase of 0.74%. After the final decision was released, oil prices stopped falling and turned higher at midday on Thursday. International Brent crude oil rose by 1% during the day to US$48.75/barrel, and U.S. oil WTI also increased by 1% during the day at US$45.74/barrel. As of the close, WTI crude oil rose 1.51% and Brent crude oil rose 1.67%.
OPEC has decided to increase production, what will be the future of crude oil?
This round of OPEC+ production reduction agreement was reached on April 12 this year. The initial agreement was to reduce production by 9.7 million barrels per day in May and June, and by 7.7 million barrels per day from July to December, in 2021. From January to April 2022, production was reduced by 5.8 million barrels per day. Saudi Arabia and Russia’s production reduction benchmark was 11 million barrels per day. The production reduction benchmark for other countries was the production level in October 2018.
Li Yunxu, an analyst at SDIC Essence Futures, told a reporter from Futures Daily that according to the initial agreement, OPEC+ production will increase step by step in July this year, January 2021 and May 2022. In early June this year, OPEC+ After several twists and turns, the meeting finally confirmed in the meeting statement on June 7 that the transition point of production reduction from 9.7 million barrels per day to 7.7 million barrels per day will be postponed to August this year. Since the second outbreak of the epidemic in Europe in September, OPEC+ has continued to release expectations for flexible adjustments to production depending on market conditions. Previously, the market generally believed that the 7.7 million barrels per day production cut quota would be extended to March 2021, but the final result of the meeting was January 2021. The step-by-step increase in production started in March, which is somewhat lower than expected. However, as this week’s OPEC+ meeting was postponed for two days and the negotiation process was slightly difficult, the market has been prepared for the upcoming increase in production. The result of the meeting will have less short-term impact on oil prices. Since production cuts are only a passive response to reduced demand, the bottoming out of oil prices does not correspond to the beginning of production cuts, and the peaking of oil prices most likely does not mean the end of production cuts. However, proactive production cuts are crucial to accelerating inventory clearance and stabilizing market sentiment during the demand recovery process, and will accelerate the pace of improvement in oil prices and monthly differences.
In fact, as news about new developments in the COVID-19 vaccine spread in the international market, international oil prices experienced a round of gains at the end of November, but OPEC+ parties disagreed on whether to continue to reduce production. Crude oil prices fluctuated.
As for the fundamental situation, Li Yunxu analyzed that because Russia and other countries have significantly improved their production reduction implementation rates, Saudi Arabia currently does not face a share crisis within OPEC or outside OPEC, and will implement later production cuts under the current oil price level. Expectations remain relatively optimistic. After the sharp decline in U.S. crude oil production, the production target of the OPEC+ production reduction alliance will mainly focus on demand expectations. Although the recent epidemic situation in Europe and the United States is still severe, as some European countries gradually unblock the agenda and vaccines are accelerated in many places, the tone of stronger demand is still expected, and OPEC+’s gradual production increase plan is unlikely to be a real negative. From a static perspective, the balance sheet shows that the call on OPEC (market demand for OPEC’s crude oil) for 4Q20, 1Q21, and 2Q21 in its November monthly report is estimated to be 26.51, 26.85, and 28.09 million barrels per day, according to Reuters survey data , OPEC production was 25.31 million barrels per day after taking into account Libya’s increase in production in November. Even if OPEC+ increases production by an average of 1 million barrels per day in the first quarter of 2021 based on current production, it will still be difficult to change the pattern of destocking. In the context of demand recovery, after the second quarter of 2021 If the production reduction can be maintained, the gap between supply and demand may further expand.
The picture shows the production trend and forecast of OPEC, Saudi Arabia and Russia
“But it should be noted that on the one hand, the upward movement of the oil price center will make the later shale oil, etc. Production expectations have been significantly revised upwards. On the other hand, the positive factors of the vaccine have raised the current oil price. The possibility of Iran and Venezuela’s production returning after Biden takes office and the instability of OPEC+’s policies after oil prices enter the mid-range have made bulls’ Concerns have increased,” Li Yunxu added.
Looking ahead to the market outlook, Li Yunxu said that under the baseline expectation of a high implementation rate of OPEC+ production cuts and demand recovery, the downward repair of global crude oil inventories and the upward repair of oil prices are still the long-term tone, but in the case of Brent crude oil prices After gradually approaching the target level of US$50/barrel, it is expected to enter a oscillating situation, and the upper space may need to be further opened.We are waiting for a new round of positive demand-side benefits such as the large-scale rollout of vaccines and the gradual resumption of international flights next year. Strategically, it is recommended to hold long-term long orders or buy more on dips after a new oscillation range is formed. In terms of internal trading, we continue to be optimistic about the gradual elimination of warehouse receipts and the return of internal and external market price differences in the first half of next year. The SC crude oil far-month contract can also continue to be used as a long-term multiple allocation standard.
Shanghai Aluminum’s rally is over?
Since this week, the overall market of the non-ferrous sector has been oscillating. During yesterday’s day trading session, the precious metal sector continued to rebound upwards. The main contract of Shanghai gold futures closed at 383.70 yuan/gram, an increase of 1.26%. The main contract of Shanghai silver futures closed at 5062. Yuan/kg, up 1.18%; the basic metal sector as a whole declined. Among them, the main contract of Shanghai Aluminum Futures closed at 16,170 Yuan/ton, ending its sixth consecutive rise, with a drop of nearly 4%.
In this regard, Gao Weihong, a nonferrous researcher at Jinrui Futures, said that the main contract of Shanghai Aluminum yesterday hit the largest single-day decline in the late epidemic period. The direct cause was that the inventory data released by the agency exceeded market expectations.
According to statistics from Shanghai Nonferrous Network (SMM) yesterday, the domestic electrolytic aluminum social inventory this week was 600,000 tons, an increase of 4,000 tons from the previous week. In terms of aluminum rods, this week Outbound shipments increased slightly by 0,100 tons. Aluminum bar inventories increased by 3,700 tons from last Thursday to 72,700 tons. Inventories in Foshan, Wuxi, and Nanchang began to rise, with Wuxi having the largest increase of 3,400 tons. Inventories in Changzhou and Huzhou both decreased slightly. 0.1 thousand tons.
“The phenomenon of accumulated reserves that just entered December exceeded market expectations, pouring a layer of cold water on the current overheated market sentiment, and bullish funds retreated.” Gao Weihong said, from the data Judging from the above, the accumulated areas are concentrated in East China and Central China. The arrival volume of East China has increased recently. At the same time, due to the rapid increase in prices, the downstream purchasing willingness is not high, while Central China is affected by the environmental protection and production restriction policies in Henan and other places. , aluminum processing companies were forced to suspend production, resulting in a decline in aluminum market consumption.
Looking to the later period, he believes that downstream purchasing sentiment has improved after yesterday’s drop in aluminum prices. In addition, the current downstream order volume has not yet seen a significant decline, and short-term demand is expected to remain relatively stable. “Therefore, the actual turning point of Shanghai’s aluminum inventory accumulation trend has not yet arrived, and aluminum prices have not yet formed a downward trend before delivery.”
“Short-term gold and silver prices have rebounded, and from a macro perspective, Mainly because the short-term impact of the vaccine on prices has weakened, and the United States has begun to re-discuss a new round of fiscal stimulus plan.” Maike Futures said that the factors that will affect the price of precious metals in the later period are, first, the latest progress of the new crown vaccine. Overall, the negative impact of the vaccine is has weakened, but the risk of impact on prices still exists; the second is the stimulus policy situation; the third is the economic situation in Europe and the United States, especially the United States. This week the United States will release November non-farm employment data and unemployment rate. If the data performance is biased, it will lead to stimulus Expected to heat up.
“In general, the price of gold and silver is facing a stage where the negative impact of the vaccine has weakened but still exists and expectations of fiscal stimulus plans are gradually rising. The price trend of gold and silver is oscillating. The short-term is still in Rebound structure, hold a small number of long orders temporarily, and gradually reduce positions as the rebound progresses.”
Methanol prices fell under pressure
o:p>
As the early positive factors were digested by the market, methanol ended its rising trend and fell back under pressure yesterday. As of the close of the day yesterday, the main domestic methanol futures contract was quoted at 2,250 yuan/ton, down. More than 2%.
In this regard, Tan Yang, a researcher at the Energy Chemical Group of China Merchants Futures Research Institute, said that the current negative factors in the methanol market are mainly reflected in the demand side and inventory side. Recently, Jiangsu Sirbon MTO Outsourcing With the maintenance of large-scale mining equipment completed, olefin demand is expected to shrink to a certain extent. Environmental protection and security inspection pressure is greater in winter, and the seasonal consumption off-season is about to occur. In the later period, traditional demand may also decrease month-on-month.
“Looking at the inventory situation, on the one hand, domestic prices rose too fast in the early stage, and now downstream resistance to high prices is gradually becoming apparent, and they are mainly purchasing for rigid needs; on the other hand, Affected by the rain and snow in the north, shipments in many places were not smooth, and the inventory of enterprises in the main inland factory areas increased month-on-month. Therefore, manufacturers also had the intention to cut prices and lower prices for shipments, and the center of inland prices fell slightly.” He said that the latest data came Look, coastal inventory has returned to accumulation, and the market’s destocking expectations have been falsified. Judging from the shipping schedule in mid-to-late December, there are still nearly 700,000 tons of imported cargo arriving at the port. The current situation at the short-term ports has also made the market mentality Bearish.
Looking forward to the later period, Tan Yang believes that it is necessary to pay close attention to the port arrival volume, the progress of port inventory depletion and the operation of external equipment. “Despite the maintenance of individual devices, the overall demand for MTO is relatively stable, which is still a strong support for the downstream consumption of methanol at the end of the year. On the supply side, there are still expectations for overall maintenance and shutdown to be brought forward, and there is still the possibility of tight supply in some areas, and with the winter heating season With the arrival of the rainy and snowy season, strong coal prices and rising freight costs have driven up the cost of methanol. The willingness of the upstream to raise prices will also provide strong support to methanol below. It cannot be ruled out that some manufacturers will adopt reluctant sales operations in the future.”
Judging from the operation of the external disk, he said that the recent strong performance of the US dollar price is expected to promote the increase in China’s re-export trade volume and thus divert the import volume. In addition, the load of Iran’s methanol plants is generally unstable and it is about to face winter gas restrictions. Stop, China’s methanol imports are expected to shrink month-on-month from the end of the year to January next year. “It is expected that the room for this fall will be limited due to the multi-party bullish speculation. After the subsequent methanol market has experienced a period of oscillation and weak adjustment, as the benefits are realized, the supply and demand side may still improve month-on-month, and there is no lack of possibility of continuing to explore.”
After the adjustment, as the good news materializes, the supply and demand side may still improve month-on-month, and there is no shortage of possibilities for continued upward exploration. ”</p
