Last weekend (July 18), OPEC+ officially issued a statement stating that the major oil-producing countries have reached a preliminary agreement. Analysts believe that although this move avoided the collapse of the production reduction alliance, due to the increase in production by multiple oil-producing countries, the total baseline is 1.63 million barrels per day, resulting in an increase of 600,000 barrels per day from the UAE. There are more baselines, which leads to the rapid loss of the advantage of tight supply, and the future growth of crude oil production and supply has become unstoppable. The supply driver, one of the engines of rising oil prices, has weakened and needs to rely on consumption to provide more power. However, the more contagious new coronavirus variant Delta and Lambda strains have spread in many countries and regions, weakening the crude oil market outlook. consumption potential.
The weakening supply and demand outlook caused international oil prices to plummet by more than 6% overnight. The price of U.S. WTI crude oil futures The price of Brent crude oil futures fell from US$71.09/barrel to US$66.53/barrel, a sharp drop of more than 7%, and the price of Brent crude oil futures fell from US$73.07/barrel to US$68.75/barrel, a sharp drop of 6.21%. The negative news was transmitted to the domestic crude oil futures market, with the SC2109 contract falling 5.40% to 413.5 yuan/barrel.
Zheng Mengqi, an energy researcher at Zhonghui Futures, believes that the results of the OPEC+ meeting have finally been implemented. Starting from August, production will increase by 400,000 barrels per day month by month until the production is fully restored to 5.8 million barrels. /day of active production reduction, and will raise the production reduction baseline of some oil-producing countries from May next year. The new baseline of UAE crude oil production reduction will be increased by 332,000 barrels/day to 3.5 million barrels/day, and Iraq and Kuwait will increase their production reduction baseline by 150,000 barrels/day respectively. , Saudi Arabia and Russia each raised their quotas by 500,000 barrels per day. These oil-producing countries have relatively sufficient idle production capacity. For example, Angola and Nigeria have relatively limited capacity to increase production. Raising the production reduction baseline can achieve the purpose of more effectively releasing idle production capacity. But this also means that crude oil supply will increase significantly in May next year. The price of crude oil futures in the far month is lower than the spot market price, which may prevent U.S. oil producers from increasing production. Therefore, OPEC+ still has pricing power on the supply side.
Currently in late July, the northern hemisphere is at its peak oil consumption period. According to statistics, as of the week of July 9, the operating rate of U.S. refineries in the United States remained at 91.80%, a slight decrease of 0.4% from the previous week’s 92.20%. Although it is higher than the 91.40% average of the past seven years, in terms of later trends , referring to the performance of U.S. refinery operating rates from 2014 to 2020, it was found that there is very limited room for continued substantial growth in operating rates in the later period, and after entering late August, the operating rates will usher in a decline because the peak oil consumption season is coming to an end. In other words, the demand increase brought by the peak season of crude oil consumption in the future will be relatively limited and will be weak in the future. From an inventory perspective, as of the week of July 9, U.S. crude oil inventories were 437.6 million barrels, which has been declining for the eighth consecutive week. It fell by 7.896 million barrels week-on-week, a year-on-year decrease of 17.70%, and a decrease of 18.296 million barrels compared with the same period in 2019. about. “Judging from the inventory trends in the past eight years, after late August, the pace of crude oil inventory depletion will also slow down and bottom out, re-entering the accumulation stage. Faced with the new regulations that OPEC+ oil-producing countries began to implement in August, Judging from the production reduction agreement, monthly production increased by 400,000 barrels per day month-on-month, the turning point of U.S. commercial crude oil inventory accumulation may be slightly earlier than in previous years.” said Chen Dong, senior analyst at Baocheng Futures Energy and Chemical Industry.
Chen Dong believes that although OPEC+ oil-producing countries have reached a preliminary agreement to avoid the collapse of the production reduction alliance and the worst case scenario will not occur, the momentum of oil-producing countries to increase production is already unstoppable. At present, although the adjustment of the crude oil production benchmark of oil-producing countries will not affect the output during the year, starting from 2022, the production baselines of many oil-producing countries will be officially raised, which means that the pressure on crude oil supply will increase significantly next year, superimposing the pressure on each country. With a monthly increase of 400,000 barrels per day, the advantage of production reduction is gradually being lost. It can be seen that crude oil supply expectations have become certain, while demand expectations still have many variables. The main influencing factors are that the epidemic is still fermenting, the global vaccination effect is uneven and slow, and the new mutant virus Delta and Lambda strains Stronger transmissibility and infectiousness will bring the global epidemic back into crisis, triggering another contraction in crude oil demand and posing new challenges and pressures on oil prices. On the one hand, there is the certainty of crude oil production and supply; on the other hand, there is the prospect of crude oil demand with variables and challenges. The supply and demand structure of the oil market is at risk of weakening, and the supply and demand balance sheet is also facing the possibility of shifting from a supply and demand gap to an excess of supply and demand.
Xie Wen, a senior analyst at Wuhan Zhongda, believes that the recent PTA price is still dominated by the cost side, and the downward movement of the crude oil price range has led to a correction in PTA prices. Judging from the supply and demand situation of PTA itself, processing fees are still in a low range. As a result, PTA is still in tight supply in some areas despite the heavy pressure on new production capacity. Currently, the maintenance volume of PTA equipment has increased due to low processing fees. As of July On the 20th, the maintenance capacity reached 14.945 million tons, the PTA operating rate was 77.08%, and the polyester operating rate was 91.70%. Therefore, PTA is still destocked in July.
Affected by the sharp drop in crude oil prices, styrene fell 4.52% within the day, the largest single-day drop this month. Xie Wen believes that styrene has mainly fluctuated with pure benzene in recent months, while forward prices are affected by the commissioning of new devices and changes in downstream demand. From the fundamentals of pure benzene itself, from July to August, pure benzene plants such as Zhejiang Petrochemical and Gulei Petrochemical have plans to put into operation, and supply is expected to grow, and the focus of pure benzene prices has shifted downward. Styrene downstream is currently in the off-season for consumption, and the downstream load is low. In addition, against the background of weak crude oil prices, the styrene base is weakening. ��The quotation of paper goods in the far month is strong, and the decline may be less than that in the recent month. Therefore, styrene may be allocated in reverse. </p
