Last night, international oil prices suddenly plummeted!
During the U.S. stock market session, WTI crude oil fell 5% during the day, and Brent crude oil’s intraday decline expanded to 4.17%.
In terms of internal trading, energy and chemical commodities continued to fall, with crude oil products leading the decline. Shanghai crude oil and low-sulfur fuel oil fell by more than 4%, fuel oil fell by more than 3%, asphalt fell by more than 2.5%, and rubber, PTA, and staple fibers fell by nearly 2%. %. As of the close of the night, crude oil products led the decline. Low-sulfur fuel oil fell by more than 4%, fuel oil and vegetable oil fell by more than 3%, and asphalt and No. 20 rubber fell by more than 2%.
According to sources familiar with the matter, the G7 plans to announce a price ceiling for Russian crude oil imports on November 23. Before the 23rd, the Biden administration in the United States may privately disclose the specific figure of the price ceiling to relevant parties in advance. If it receives the support of EU diplomats, it will officially announce it that evening.
However, there are still variables in the above timetable. Biden administration officials told the media yesterday that the United States plans to issue guidance on the oil price cap in the coming days and is prepared to “encounter some hiccups” during implementation.
At the close this morning, the decline in international oil prices narrowed significantly. WTI December crude oil futures closed down 1.91%, with a cumulative decline of 9.98% this week. Brent January crude oil futures closed down 2.40% and fell 8.72% this week.
In addition, on the 18th local time, European Central Bank President Christine Lagarde said in her speech at the European Bank Conference in Frankfurt, Germany, that given that the inflation rate in the euro area has continued to rise in recent months, the European Central Bank will consider continuing to raise interest rates. , in order to bring the inflation rate in the euro area back to the medium-term target.
Lagarde explained in her speech that maintaining price stability in the euro area is the responsibility of the European Central Bank, and the European Central Bank must
Actions must be taken to stabilize market expectations and prevent high inflation from having a deep and long-term impact on the EU economy.
North Korea launched an intercontinental ballistic missile. South Korea said it could hit the entire continental United States. Six countries held an emergency meeting to put pressure on the United States.
According to Yonhap News Agency’s report on the 18th, North Korea launched an intercontinental ballistic missile into the eastern sea in the Sunan area of Pyongyang City on the morning of the 18th, triggering a strong reaction from South Korea. In response, leaders of the United States, Japan, South Korea, Australia, New Zealand and Canada held an emergency meeting and vowed to put pressure on North Korea.
Yonhap News Agency reported that North Korea launched a short-range ballistic missile (SRBM) into the eastern sea on the 17th. On the 18th, North Korea fired another missile. The missile launched by North Korea has an altitude of approximately 6,100 kilometers, a range of approximately 1,000 kilometers, and a flight speed of approximately Mach 22. This missile is the same model as the “Hwasong-17” launched by North Korea on the 3rd. Analysts from the South Korean military and experts believe that if the intercontinental ballistic missile launched by North Korea on the 18th is launched at a normal angle, its range can reach 15,000 kilometers, and its strike range can cover the entire continental United States. “Hwasong-17” adopts a multi-warhead separately guided vehicle. Once the warhead separation is successfully completed over the target, it can strike Washington and New York simultaneously.
The United States’ strengthening of “extended deterrence” to South Korea and Japan is considered to be one of the reasons for North Korea’s tough response. On the 17th, North Korea’s Foreign Minister Choe Son Hui sternly warned the United States, Japan and South Korea that the “tripartite conspiracy” will definitely play a role in causing the situation on the Korean Peninsula to fall into a more unpredictable situation. The more the United States insists on providing “extended deterrence” to its allies and launching bluff military provocations on the Korean Peninsula and in the region, “the more intense North Korea’s military response will be.”
What’s the reason for the sharp drop in crude oil this week?
After last week’s collective rise, risk appetite in the external financial market fell back this week, driving risk assets such as crude oil to fall sharply. On Thursday, international oil prices fell further due to macroeconomic factors again. Many Federal Reserve officials spoke in a hawkish tone, causing investors to worry that the Federal Reserve would raise interest rates more aggressively. The market continued to trade the logic that sharp interest rate increases would lead to economic recession. “The recent trend of domestic crude oil futures SC prices has been weaker than that of external oil prices, mainly due to the pressure brought by the sharp appreciation of the RMB. It also shows that investors are relatively less confident in the recovery prospects of domestic oil demand. The decline in internal and external oil prices has driven Fuel oil prices have fallen sharply,” said Du Bingqin, an energy and chemical analyst at Everbright Futures.
Regarding the recent decline in the crude oil market, Dong Chao, a crude oil futures analyst at Shenyin Wanguo Futures, believes that the first is the decline in demand. This week, OPEC once again lowered its crude oil demand expectations for this year and next. Since the beginning of this year, OPEC has lowered its demand forecast five times. Compared with the demand forecast at the beginning of the year, it has been lowered by more than 1 million barrels per day, which shows the suppression of demand by high oil prices and the cumulative effect of successive interest rate hikes on the global economy. Second, the missile attack in Poland and the temporary suspension of the Friendship Pipeline proved to be false alarms. The geopolitical situation remained stable this week and failed to provide sufficient motivation for crude oil bulls. Third, due to the appreciation of the RMB, the decline in domestic oil prices was significantly greater than that of international crude oil. In addition, the market generally expects that domestic industrial products will be weak in the near future and strong in the far future, resulting in the rapid narrowing of crude oil price difference between near and far months, exacerbating the decline of the main domestic contracts.
Du Bingqinjie��The imported methanol volume is as high as 11-12 million tons, and nearly 70% of the raw material methanol for MTO in East and South China comes from imports. Therefore, this US sanctions will have a greater impact on the domestic imported methanol market. In addition, the current port basis continues to strengthen, and the atmosphere The sharp rise has driven the main methanol futures contract to rise sharply.
However, Liu Shuyuan, an analyst with the CITIC Futures Energy and Chemical Team, also told reporters that this news affects the market’s short-term sentiment more and has no substantial connection with methanol fundamentals.
The reporter learned during the interview that on the supply side, loss-making production cuts were less than expected, and methanol companies continued to accumulate inventories. At present, the overall coal price is mainly declining. The pit price of 5500K in Inner Mongolia has dropped to 1130 yuan/ton, and the pit price of 5500K in northern Shaanxi has dropped to around 1180 yuan/ton. In mid-November, although the methanol bidding prices of mainstream manufacturers in the northwest region continue to It has reached a new low, but as coal prices continue to decline, the loss range of coal production is basically stable. The coal production loss of mainstream manufacturers in the northern part of Inner Mongolia is around 280 yuan/ton, and the coal production loss of mainstream manufacturers in northern Shaanxi is around 290 yuan/ton. Coal production losses in Guanzhong and Henan are at 350 yuan/ton, which is basically within the tolerance of manufacturers. Xinao’s 600,000-ton unit restarted after a short shutdown, and Huayu’s 1.2 million-ton unit was completed after maintenance and is increasing its load, resulting in loss-making production cuts. Not as good as expected. “At the end of November, as coal prices have further weakened, the loss has narrowed slightly, and the space for further reduction in the coal-to-methanol operating rate will be very limited.” Zhang Mengchao said.
Liu Shuyuan introduced that the current supply of methanol is mainly loose. With the recent continuous correction of coal spot prices, the production reduction of upstream methanol plants is less than expected. The domestic Baofeng plant will still be put into operation in late December, and the short-term domestic supply is sufficient; and this week, foreign prices The restart of Iran’s Kaveh 2.3 million tons/year methanol plant has led to a rebound in methanol import expectations in December. The variable for future methanol supply lies more in whether the shutdown of domestic and foreign gas head devices from December to January will cause an obvious phased contraction in domestic supply.
“The current methanol demand side is still in a weak position. Due to weak terminal demand such as PP and weak spot prices, MTO factory profits have not recovered significantly. A few port MTO units that have not stopped have maintained low operating loads. It is expected that the short-term MTO operating rate will be difficult. From the perspective of traditional downstream demand, the short-term demand for formaldehyde and acetic acid is average, and only a few traders are expected to have appropriate stocking needs before the Spring Festival.” Liu Shuyuan said.
In fact, in mid-to-late November 2022, as the epidemic further spreads, the downstream methanol production continues to be compressed. From a seasonal perspective, the overall demand will be in a seasonal downward trend. Although inland methanol prices continue to fall, terminal downstream demand With the impact of the economic downturn, profits have been gradually compressed and downstream losses have continued to expand. It is expected that the room for demand recovery before the Spring Festival will be very limited. Among them, MTO profits declined significantly, losses expanded, and demand lacked elasticity of growth in November and December. “With the weakening of the domestic macroeconomics, domestic real estate demand is temporarily flat, methanol delivery prices are high, methanol to olefin monomer losses continue to expand, and external methanol to olefin monomer losses have expanded again. As of November 18, methanol to olefin monomer The loss continues to be above 1,500 yuan/ton, and the comprehensive downstream loss has expanded to about 800 yuan/ton. As terminal demand continues to be sluggish, the MTO operating rate is expected to trend downward further,” Zhang Mengchao said.
In fact, the current contradiction in the methanol market is the differentiation between the mainland and the ports. Supply in the mainland is abundant, corporate inventories continue to accumulate, and have reached historical highs. However, demand continues to be sluggish and prices continue to decline; inventories in port areas are low, and there is great uncertainty in imports in November and December. The basis continues to strengthen amid rigid demand. , the price performance is strong.
Liu Shuyuan believes that the inventory of methanol ports is at a low level compared with previous years. Under the influence of the epidemic, logistics is not smooth, the supply of goods from the mainland to the port is less, and the supply of goods available for circulation at the port is tight, resulting in a very strong methanol basis in recent months (November The basis of methanol paper goods fluctuated around 200 yuan/ton). As the delivery of the 01 contract approaches, we do not rule out the possibility that the futures price of the methanol 01 contract will rise slightly to repair the basis due to the delivery logic. However, if the mainland spot price falls sharply in the later period, the mainland price gap opens up and the supply of goods circulates, the methanol port price and the 01 contract futures price will face upward pressure.
“Coal prices continue to fall, costs in the mainland continue to decline, and prices continue to weaken. In the later period, as the downstream window opens, methanol inventory in the mainland and ports will reach a balance, the basis difference will return to a reasonable range, and the overall price center of gravity will resonate downward.” Zhang Mengchao said.