Saudi Arabia and Russia, the de facto leaders of OPEC+, have reached a preliminary agreement to extend the current record production cuts for one month while increasing pressure on countries that do not comply with the production reduction agreement, sources said on Wednesday. It is unlikely that a later meeting will be brought forward to Thursday. The latest tough stances from Saudi Arabia and Russia have injected greater uncertainty into the oil market.
Data show that OPEC+’s production reduction implementation rate in May was only 86%. As OPEC’s second largest oil producer, Iraq needs to cut production by 1 million barrels per day, but the current implementation rate is less than 50%. Some West African member states have failed to meet their promised production reduction targets, with Angola and Congo having implementation rates of only 54% and 20% respectively.
Affected by the news, international oil prices plunged during the session on Wednesday and closed slightly higher. As of the close of the day, the July contract of NYMEX WTI crude oil futures closed at US$37.29/barrel, an increase of 1.30%; the August contract of ICE Brent crude oil futures closed at US$39.79/barrel, an increase of 0.56%.
Gold and silver prices have fallen recently. Analysts believe that this is mainly affected by two major factors: technical and fundamental factors.
As of the close on June 3, the August COMEX gold futures contract closed at $1,704.8 per ounce, a decrease of 1.68%; the July COMEX silver futures contract closed at $17.958 per ounce. , a decrease of 1.65%.
The Nenghua sector is on a “roller coaster”
Accepting the news Affected by the impact, international oil prices plunged during the session on Wednesday and closed slightly higher. As of the close of the day, the July contract of NYMEX WTI crude oil futures closed at US$37.29/barrel, an increase of 1.30%; the August contract of ICE Brent crude oil futures closed at US$39.79/barrel, an increase of 0.56%.
Yesterday, the Nenghua sector performed a “roller coaster” market. During yesterday’s day trading session, most of the energy sector varieties in the domestic futures market closed higher. Among them, fuel oil rose by more than 5%, INE crude oil rose by more than 4%, and styrene rose by more than 2%. However, during the night trading session, most of the domestic commodity futures energy and chemical sectors fell. As of the close of the night, polypropylene fell by 1.79%, PVC fell by 1.5%, plastics fell by 1.42%, LPG fell by 1.06%, and PTA fell by 1.02%.
As for the repeated market trends in the energy and chemical sector, Yu Pengsen, an energy and chemical researcher at Zhaojin Futures, said that it is mainly affected by the crude oil market. “The energy and chemical sector rose sharply during the day on Wednesday, mainly driven by the sharp rise in crude oil. Since OPEC+ may hold a meeting on June 4, the market generally believes that OPEC+ will extend large-scale production cuts for one month, and the market sentiment is relatively positive. But yesterday In the evening, OPEC+ announced that the meeting would be postponed, causing a sharp correction in the entire energy and chemical sector on Wednesday night.”
Sources said that the de facto leaders of OPEC+, Saudi Arabia and Russia, have reached an agreement The preliminary agreement would extend the current record production cuts by one month while increasing pressure on countries that do not comply with the agreement, but it is unlikely that a meeting scheduled for later June will be brought forward to Thursday. Oil prices fell early in the session when foreign media reported that Thursday’s meeting was in doubt.
According to foreign media reports, OPEC+ will not hold a meeting on June 4, mainly due to problems with the implementation of production cuts. Market sources said that as OPEC’s second largest oil producer, Iraq needs to reduce production by 1 million barrels per day, but the current implementation rate is less than 50%. Although Iraq has instructed Basra Oil Company to reduce production, foreign oil companies such as BP and Exxon Mobil have not yet agreed to a production reduction action plan and are still negotiating.
In addition, data shows that OPEC+’s implementation rate of production cuts in May was only 86%. Some West African member states have failed to achieve their promised production reduction targets. Among them, Angola and Congo’s implementation rates are only 54% and 20% respectively. Gabon’s production in May even exceeded the production in October 2018. The country was originally supposed to achieve the production reduction target in 2018. Production in October this year was reduced by 23% from the baseline.
Spurred by the news, U.S. and Brent crude oil plunged rapidly, with Brent crude oil falling nearly 2% during the session.
At the same time, there is also news of the resumption of shale oil production in the United States. U.S. shale oil producers Parsley Energy and EOG Resources announced on Tuesday that they would partially or fully resume production. Parsley plans to restore 26,000 barrels per day of production cut this spring. The head of EOG Energy said that it will reopen closed oil wells and add new wells in the second half of this year.
“Looking ahead to the mid-term trend of the energy sector, the rise and fall of crude oil is still the focus of attention. For oil prices, the current correction is only short-term, and a mid- to long-term rise is a high probability event. .” Yu Pengsen said that for domestic refined oil, since the current breakthrough of Brent crude oil above the US$40/barrel mark is only temporary, the price adjustment mechanism of my country’s refined oil needs to take into account the changes in oil prices in the three places within 10 working days. Therefore, there is a high probability that there will be no adjustment during this round of refined oil price adjustments.
Data released by the U.S. Energy Information Administration (EIA) yesterday evening showed that U.S. commercial crude oil inventories were 532.3 million barrels last week, a decrease of 2.1 million barrels from the previous month. Including commercial crude oil, refined petroleum products, propane and propylene, U.S. commercial oil inventories increased by 15.1 million barrels last week.
The precious metals sector has experienced a correction
The stocks that performed well last week Precious metal plate��, ushered in a correction yesterday. During yesterday’s daytime trading session, Shanghai gold fell more than 1% to close at 393.04 yuan/gram, and Shanghai silver fell nearly 2% to 4,388 yuan/kg.
As for the external market, as of the close of June 3, the August COMEX gold futures contract closed at 1,704.8 US dollars per ounce, a decrease of 1.68%; the COMEX silver futures July contract closed at 17.958 USD/oz, down 1.65%.
In this regard, Wang Jun, senior analyst at Minmetals Economics Futures, said that gold and silver prices have fallen recently, and the precious metal sector as a whole is still in early oscillations Within the platform, as gold has been unable to break through upward, silver has also fallen back under pressure and has not continued to rise on its own.
“We believe that the recent fall in gold and silver prices is mainly affected by two major factors: technical and fundamental factors. From a technical point of view, gold’s strength is around $1,800 per ounce. At the pressure level, it is difficult to break through without the cooperation of news and funds. Although the trend of silver has been stronger than gold recently, it is difficult to break away from gold and get out of the independent market.” Wang Jun believes that from a fundamental point of view, the Federal Reserve has repeatedly denied negative interest rates in recent times. This blocks the room for nominal interest rates to continue to decline. In the post-epidemic era, inflation is prone to recurrence, making it difficult for real interest rates to decline smoothly and for gold to continue to break through.
Looking at the short-term market, he said that the recent overall correction in the precious metal sector is expected to continue. “From a financial perspective, gold bulls have been experiencing net outflows, while inflation expectations have fallen. As well as technical pressure, there is also a need for a correction on the market.”
Wang Jun also said that since the Federal Reserve’s extremely loose monetary policy will continue to be maintained, it is difficult for the precious metal sector to fall sharply. The short-term correction is to gain momentum for future rises. “We recommend Pay attention to the support of gold around 1,680-1,700 US dollars per ounce, and you can buy precious metals on dips in the future.”
White sugar futures reduced positions and rebounded
During the day trading session yesterday, domestic futures Most of the market closed higher, with the main sugar futures contract closing up 2.53% at 5,072 yuan/ton, with 9,725 positions reduced per day. During the night trading session that day, sugar futures maintained a strong trend.
“White sugar futures rebounded by more than 100 yuan/ton on Wednesday, and at the same time, the spot market was also stimulated by the rise in the market, and transactions showed heavy volume.” Huatai Yang Zeyuan of the White Sugar Futures Department told a reporter from Futures Daily that the rise in sugar this time was, on the one hand, driven by the surge in raw sugar, which restored domestic confidence; on the other hand, it was due to the fact that futures prices were at a deep discount to spot prices, and there was a risk of futures Demands for current basis repair.
In his view, the current fundamentals of sugar include low midstream and downstream inventories. Entering June, the peak sugar consumption season is approaching, and there may be a round of spot replenishment in the future. Procurement Quotes.
“However, there are currently negative factors in the market. After the import tariff was reduced in late May, the cost of imported sugar processing dropped sharply by nearly 1,000 yuan/ton, making the current price of imported processed sugar in the sales area It has more advantages than domestically produced sugar.” Yang Zeyuan said. In addition, starting from mid-May, domestic sugar sales have continued to be impacted by imported processed sugar. Data released by the China Sugar Association shows that Guangxi sold 450,000 tons of sugar in a single month in May, a year-on-year decrease of 160,000 tons; due to strong discounts, Yunnan sold 237,100 tons in a single month in May, an increase of 34,900 tons year-on-year, but so far Yunnan has not harvested yet, and sugar production has changed from an early estimate of a decrease to an increase.
“Looking up, the price difference between domestic and foreign prices is still huge. The cost of imported processed sugar is far lower than the domestic spot price, and the possibility of heavy imports cannot be ruled out. Looking down, the futures discount is deeper. , and the inventory in the middle and lower reaches of the industry is low, the basis difference has a supporting effect on sugar futures.” Yang Zeyuan said that in the short term, sugar futures will maintain an oscillating trend at 4900-5150 yuan/ton, waiting for direction selection.
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