Frequent supply disruptions to hedge against demand pressure

1. Oil prices rose more than 2%, with a weekly gain of more than 8%, as Russia announced plans to reduce oil production next month after the West imposed price caps on Russian crude oil and fuel.

2. Short-term analysis: Crude oil supply interruptions have occurred frequently in the near future. The earthquake in Turkey reduced Azerbaijan's crude oil exports by 600,000 barrels per day, technical failures reduced production in Norway's oilfields by 500,000 barrels per day, and oil field maintenance reduced Kazakhstan's production by 200,000 barrels per day. The recovery time is uncertain. The longer the supply disruption lasts, the stronger the support for crude oil prices.

1. Short-term oil price shock

①The upward momentum mainly comes from the boost of financial transaction sentiment. The economic performance of the US and Europe was higher than expected, and both the leading indicators and the prosperity index showed signs of improvement. The Federal Reserve's slowdown in raising interest rates has boosted financial risk appetite, U.S. stocks have risen, the U.S. dollar has fallen, and U.S. oil futures have increased their positions significantly.

②The downward pressure comes from the status quo of accumulation of fundamentals. Although road traffic in China, the United States and Europe has seen good growth recently, it is not enough to complete the hedge against the pressure of excess supply in the early stage. The accumulation cycle since the middle of last year is still continuing. At present, the OECD commercial oil product inventory corresponds to the historical oil price of about 75-85 US dollars per barrel.

2. Improved demand expectations

①China's demand for oil products began to recover. After the peak of the epidemic at the end of last year, road traffic has rebounded sharply since January. Refinery gasoline and diesel shipments have improved significantly, wholesale prices have risen sharply, processing profits have improved, and operating rates have gradually picked up. It is expected that there is still room for gasoline demand to rise in the later period, and diesel demand depends on economic progress.

②The pessimistic expectations for oil product demand in the United States eased slightly. Last year's high oil prices and economic slowdown put greater pressure on the demand for oil products in the United States and Europe. Since the beginning of this year, the traffic trips in the United States and Europe have increased year-on-year. If the later economic recession is expected to improve, it will boost the demand for overseas oil products.

3. Long and short supply coexist

① OPEC's implementation and continuation of production cuts will benefit oil prices. The OPEC meeting on February 1 decided to continue the production cut policy. In January, Saudi crude oil exports fell sharply by about 500,000 barrels per day month-on-month.

②The supply of Russian crude oil remains high, which is negative for oil prices. In January, Russia's seaborne crude oil exports increased by about 800,000 barrels per day month-on-month. Follow-up attention will be paid to the relative adjustment range and comprehensive effect results of the two.

3. Oil price outlook: ①In the first half of January, the rise in oil prices was partly due to the leading financial expectations. In the future, if the economic and demand improvement expectations can be realized, there is still room for oil prices to rise.

4. The 70-100 expectation is temporarily maintained in the large range for the whole year. If short-term WTI falls back to $70/barrel again, pay attention to whether there is an opportunity to enter the market with more orders.

5. Risk warning: Upside risk: Sudden supply interruption, unexpected production cut; Downside risk: Global economic recession