The medium and long-term trend for crude oil is positive | Crude oil_Sina Finance_Sina.com

Original title: The crude oil trend is improving in the medium and long term Source: Original

Recently, macroeconomic market sentiment has continued to improve and risk appetite has increased. Against this backdrop, crude oil is moving higher as a whole, and it is recommended to do more at the lowest point of the callback.

After the results of the United States general election became clearer, the market’s appetite for risk recovered, and at the same time, frequent positives in the development of new corona vaccines have increased market risk sentiment. Although the results of the OPEC + meeting fell short of expectations, the market can also accept the modest way to increase production. Furthermore, with the release of non-state import quotas, China’s enthusiasm for buying crude oil continues to rise. In general, the oil market in the medium and long term is more favorable and the direction of the operation is upward.

The appetite for market risk has increased

Recently, macroeconomic market sentiment has continued to improve and risk appetite has increased. The author believes that this is due to the gradual clarity of the results of the United States general elections, which to a certain extent eliminates greater uncertainty and promotes a rebound in market risk sentiment; on the other hand, it stems from the frequent positive development of new corona vaccines, further promoting the market. Be more emotional. Also, the US dollar has recently broken down, giving rise to commodities, including crude oil. The current US fiscal stimulus bill will restart negotiations, which is expected to push the dollar further lower. In either case, there is a basis for long-term dollar weakness going forward, and it will continue to support crude oil.

OPEC + reached an agreement to increase production moderately

The meeting of oil-producing countries has been resolved. The OPEC + oil producing countries agreed to voluntarily adjust the number of production cuts from 7.7 million barrels / day to 7.2 million barrels / day, reducing 500,000 barrels / day as of January 2021, and they will be held every month. A ministerial meeting to assess market conditions and decide the scale of production adjustments next month, with monthly adjustments not exceeding 500,000 barrels per day. In addition, the compensation period will run until the end of March 2021. Judging from market expectations on the eve of the meeting, it is generally believed that the 7.7 million barrels per day production cut will last for at less 3 months. From this point of view, the results of the meeting were worse than expected, but the monthly increase in production of up to 500,000 barrels per day is actually a relatively modest way to increase production and will not bring too many supply shocks to the market. . Therefore, judging from the market performance after the meeting, it did not put significant downward pressure on the disc.

The author believes that as the new corona vaccine is gradually put into use in 2021, the impact of the epidemic on oil demand is expected to gradually weaken, and the recovery in demand will also promote the reduction of the production in oil-producing countries, because in the future OPEC + will have a high probability of reducing production in the framework of reduced production. Amplitude.

US shale oil shows weak recovery

With the recovery of low oil prices, shale oil upstream investment activities have recently recovered to some extent. At the end of November, the number of rigs has rebounded to 241, a 40% increase from the lowest point, but is still in the all-time low range. At the same time, shale oil drilling and completion activities in the US have also shown signs of recovery. With the rebound in oil prices and the rise in upstream investment activities, drilling and completion data for the seven major shale oil producing regions in the United States has increased, although drilling rigs Limited increase in the number of perforations results in a small increase in perforation, but the increase in completion data is more obvious.

Inventory wells have declined significantly since July, and the production rate of the seven major shale oil producing areas in the United States has recovered significantly, reflecting the increased willingness of shale oil companies to complete wells. under the recovery of oil prices. Judging from the oil price level at the end of this year, it has been able to satisfy the will of most companies to complete inventory wells and at the same time, it is close to satisfying the will of shale oil companies. to increase drilling platforms. With the expected further increase in oil prices in the future, shale oil completion activities in the United States are expected to continue to increase and cause an increase in U.S. crude oil production, but will expects US shale oil overall to still show a weak recovery.

Buying enthusiasm grows from China

In the last month, local refineries are reported to have focused on buying cheap crude oil from West Africa. In November, refining and buying crude oil from Russia, Brazil and the North Sea increased. Due to frequent positive reports on the macroeconomic level and continued production reductions in the overlapping oil producing countries, domestic buyers of crude oil are concerned that the price of oil will continue to rise in the future and increase acquisition costs . Therefore, the recent enthusiasm for shopping has increased significantly. However, since the domestic non-state commercial import quotas have basically been consumed this year, buyers buy crude oil forward in January and early February 2021, and declare imports after the quota is released from import in 2021.

(Author’s unit: Founder Interim Futures)