Early this morning, international oil prices suddenly plummeted. U.S. oil once fell by more than 3%, and Brent oil once fell by more than 2%.
CITIC Futures analyst Yang Jiaming said that yesterday there was a lot of bullish news about crude oil, and there was another big geopolitical incident. A missile that fell into Poland killed two people. The geopolitical premium of crude oil returned, and oil prices rose. At the same time, there is no recession in the Eurozone economy, U.S. PPI has fallen more than expected, and expectations of interest rate hikes have been further strengthened, driving the market’s bullish sentiment. But during the night, U.S. officials said that the missile that hit Poland was launched by the Ukrainian army. The United States’ pursuit of active cooling will bring about a fall in the geo-premium of crude oil. The suspension of expectations for interest rate hikes will provide support to financial assets. The downward trend of oil prices in the medium and long term has not changed.
On the supply side, according to Zheng Mengqi, an analyst at Hizheng Futures, U.S. crude oil production has not changed much. In November, OPEC+ began to implement a production reduction policy of 2 million barrels per day. Although due to limited production capacity in Nigeria, Angola and other countries, the actual production reduction was less than 2 million barrels per day. 10,000 barrels/day, but compared with the actual output of OPEC production-reducing member states in August and September, OPEC production-reducing countries will actively reduce production by 853,000 barrels/day and 978,000 barrels/day respectively, thus tightening supply. It is reported that Saudi Aramco has told at least four North Asian refinery customers that they will receive the full amount of crude oil stipulated in the contract in December. Although OPEC+ lowered its daily production target by 2 million barrels starting this month, Saudi Arabia is still maintaining stable supply to Asia. On December 5, EU sanctions against Russia’s ban on shipping oil took effect. The United States and its allies have reached an agreement on price caps for Russian oil sales. Each shipment of Russian seaborne oil will only be subject to the price cap when it is first sold to a buyer via land. This means that reselling the same oil does not require Subject to price cap. The upper limits set by the United States and the European Union on Russian oil prices have a greater impact on oil prices and require further tracking.
“On the demand side, external gasoline, heating oil, and diesel cracking have all fallen back from high levels, but heating oil and diesel cracking are still at relatively high levels, and refinery processing demand has rebounded seasonally. Domestic epidemic prevention and control policies have been further optimized, which has boosted terminal demand, and the entry quarantine policy Changing from ‘7+3’ to ‘5+3’ and canceling the circuit breaker mechanism for inbound flights will boost demand for jet fuel. Overall, crude oil prices can be bullish on dips,” Zheng Mengqi said.
“Basically, the IEA raised its demand forecast and lowered its Russian production forecast. The report expressed concern about the reduction in supply after sanctions against Russia took effect on December 5. OPEC+ countries led by Saudi Arabia and the United Arab Emirates began to actively reduce production this month. , supply continues to be compressed, combined with the sharp destocking of API crude oil in the morning, all of which have brought positive disturbances to crude oil prices. Short-term supply-side support, especially the effective sanctions and the implementation of production cuts, will keep crude oil oscillating at a high level.” Yang Jiaming reminded.