[At the beginning of the crude oil market] The oil market is mixed, and the late EIA is expected to rain again.

Huitong.com, January 19th - At the beginning of the crude oil market on Thursday (January 19th), the oil price rebounded slightly from the overnight low. US oil traded around 51.48 US dollars / barrel, an increase of about 0.78%; oil oil trading at 54.37 US dollars / barrel, an increase of about 0.18%. The latest OPEC monthly report shows that major oil producing countries are actively reducing production. The OPEC Secretary-General also affirmed the attitude of the major oil-producing countries in implementing the production reduction agreement. However, the market is worried that the rise in oil prices will stimulate US shale oil producers to increase production, and in turn offset the boost effect of the production reduction agreement on the oil market.

In addition, although the latest data released by the American Petroleum Institute (API) showed that API crude oil inventories and Cushing stocks recorded a decrease, the increase in refined oil inventories offset the positive factors brought about by the decline in crude oil inventories and refined oil inventories. Moreover, the rebound in the US dollar index and the remark that US President-elect Trump said the border tax is "too complicated" also put pressure on oil prices. The EIA inventory data to be released in the early hours of Beijing time on Friday (January 20th) is expected to be affected by the oil market. Due to the impact of Martin Luther King Day on Monday, all oil inventory data are delayed. Released one day.



On Wednesday (January 18), US WTI crude oil futures closed down 2.67% to $51.08 per barrel. Brent crude oil futures closed down 2.79% to $53.92 per barrel. It is widely expected that rising oil prices will lead to an increase in US shale oil production, offsetting OPEC's efforts to reduce supply and reduce excess stocks. In addition, the rebound in the US dollar index and the remarks made by US President-elect Trump that the border tax is “too complicated” also put pressure on oil prices.


(The picture above shows the US contract price of the NYMEX crude oil futures contract in February)


(The picture above shows the B-line chart of Brent crude oil futures March contract price)

OPEC Secretary General Balkindu said on Thursday (January 19) that the implementation of the production reduction agreement has been very good. OPEC needs time to decide whether to extend the production reduction agreement. All 24 member states have made great efforts to implement the production reduction agreement. OPEC is cautiously optimistic about the decline in crude oil inventories. The price of oil is far from reaching an equilibrium level.

The International Energy Agency's IEA believes that the reduction in production by OPEC and several other non-OPEC oil producing countries will significantly increase the US shale oil production. The International Energy Agency's Director, Fatih Birol, said in an interview at the Davos Forum on Wednesday (January 18) that US shale oil producers will respond clearly and strongly to oil prices. The $56/barrel-$57/barrel oil price level will make shale oil manufacturers feel profitable.

From the perspective of supply and demand fundamentals, the latest published OPEC monthly report shows that OPEC member countries' daily crude oil output in December decreased by 209,900 barrels per day to 33.85 million barrels per day, the first decline in seven months. Moreover, the monthly report said that there are many positive signs that non-OPEC countries are complying with the commitment to reduce production. The monthly report also lowered the estimate of the 2017 crude oil supply surplus and slightly raised the 2017 global crude oil demand growth estimate. In addition, the monthly report said that due to the active oil drilling activities in the United States, US shale oil production is expected to increase. Therefore, the 2017 US crude oil production is expected to increase by 230,000 barrels per day.

According to data released by the American Petroleum Institute (API) on Thursday (January 19), the US crude oil inventories decreased by 5.042 million barrels in the week ended Jan. 13, which is expected to decrease by 960,000 barrels; gasoline inventories increased by 9.75 million barrels. It is expected to increase by 2.345 million barrels; refined oil inventories will increase by 1.17 million barrels, which is expected to decrease by 863,000 barrels; Cushing crude oil inventories will decrease by 1.01 million barrels, which is expected to decrease by 187,000 barrels.

In addition, the API reported that US crude oil inventories fell by 5.04 million barrels to 479.2 million barrels last week; US crude oil imports fell by 1.024 million barrels per day to 7.806 million barrels per day last week.

Well-known financial zero-hedged commented that after the API crude oil inventory data released last week recorded a higher-than-expected increase, the data released this week was much larger than the expected decline (actual decline of 5.042 million barrels). Although the price of oil was temporarily reduced by the news, the data released this week showed that both refined oil and gasoline inventories recorded a significant increase, and the oil price continued to decline.

OPEC said on Thursday (January 19) that Saudi Arabia’s policy of using natural gas instead of oil as a fuel for power generation has had a major impact on its domestic crude oil consumption. Saudi Arabia’s domestic crude oil demand fell sharply by 290,000 barrels per day in November, down 12% year-on-year. Oil consumption as a fuel for power generation fell by 150,000 barrels per day, down 29% year-on-year. Due to the decline in oil demand, Saudi Arabia’s total refined oil consumption in November fell to 2.16 million barrels per day, the lowest level since the same period in 2013. In addition, the demand for oil in the Middle East in 2016 was the same as last year. With the economic recovery of some Middle Eastern countries, oil demand is expected to increase by 110,000 barrels per day in 2017.

Huitong.com reminded: Due to Monday (January 16th), the US public holiday, the US EIA crude oil inventory data for the week ending January 13 was postponed to 0:00 midnight on Friday, January 20 (January 20). In addition, the International Energy Agency (IEA) will announce the monthly crude oil market report at 17:00 Beijing time on Thursday (January 19). Investors should pay close attention.

From a geopolitical perspective, the border tax supported by the US Republican Party will have an impact on US imports due to market expectations. Traders believe that the US crude oil benchmark price will rise above the Brent crude oil price and continue to increase the bet. However, in an interview with The Wall Street Journal this week, Trump said that the border tax was “too complicated” and cast a shadow over the US tax reform plan, which put all the bets on rising crude oil prices at stake.

US President-elect Trump will hold the inauguration ceremony on Saturday, January 21 (January 21). It is extremely difficult to pass far-reaching tax legislation in the US Congress. The market still needs to observe whether the new US president and Republican leaders have the opportunity to work together on major policy changes.

From the perspective of market linkage, the US dollar index rebounded on Wednesday (January 18) under the support of Federal Reserve Chairman Yellen and the support of brilliant economic data, reversing the sharp decline in the previous trading day and alleviating Trump’s fear of strength. The dollar is not conducive to the pessimism brought about by the competition of US export products. Under normal circumstances, a stronger dollar will weigh on the dollar-denominated oil price. The weaker dollar will support oil prices to a certain extent. Investors need to pay close attention to the dollar.

In anticipation of the market, IEA Director Fatih Birol said in an interview at the Davos Forum on Wednesday (January 18) that although OPEC has recently reached a production reduction agreement, oil prices may be due at the end of 2017. Started to fall. Because US shale oil will fill the gap in production, the outlook for oil prices is still bearish.

At the same time, London-based energy research institute WTRG Economics energy economist James Williams also said that due to concerns that the US shale oil production will offset the positive impact of OPEC production cuts, so the current implementation of oil prices and OPEC The prospect of a production reduction agreement is still bearish.

In addition, Jia Tao, a researcher at the Development Research Center of the State Council of China, said that it is still unknown whether non-OPEC countries are only committed to reducing production in Russia, and whether 13 non-OPEC major oil producers will cut production and how much space is reduced. Among the OPEC countries that have promised to cut production, the implementation of the production reduction agreement is one of the important factors affecting the 2017 oil price. Judging from the supply side, due to the real difficulties of the economies of various countries and the "prisoner's dilemma" (hoping that others will reduce production and not reducing themselves), the OPEC oil production reduction agreement may be similar to the historical 17 times. There will be a lot of discounts during the implementation. In addition, it should be noted that international oil prices are usually denominated in US dollars, and the US dollar remains strong in the context of interest rate hikes. The strength of the US dollar will curb the rise in oil prices.

Huitong Finance and Economics Huihui market software shows that at 09:53 Beijing time, US WTI crude oil futures reported 51.48 US dollars / barrel; Brent crude oil March futures reported 54.38 US dollars / barrel.

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