U.S. WTI crude oil rose more than 5% during Chinese New Year

During the Spring Festival, international oil prices continued to hit new highs. From January 31 to February 4, the main contract of NYMEXWTI crude oil futures rose by 5.30% to close at US$91.92/barrel, and the highest rose to US$93.17/barrel, a 7-year high; during the main contract of ICE Brent crude oil futures A cumulative increase of 4.10%, to close at 92.52 US dollars / barrel, the highest rose to 93.70 US dollars / barrel, also hit a 7-year high, and international oil prices have risen for seven consecutive weeks.

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In this regard, An Ziwei, a senior energy analyst at the Topix Derivatives Research Institute, told the "Securities Daily" reporter: "Fundamentals are expected to remain strong is the main reason for this round of oil prices to rise." The price of light crude oil futures on the New York Mercantile Exchange in the United States , the increase was significantly larger. This also has an important relationship with the continued decline in domestic crude oil inventories in the United States.

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In terms of news, on February 3, local time, some parts of the United States encountered blizzard weather, which has caused at least 4,000 flights to be cancelled that day. The blizzard is currently headed toward Texas, the epicenter of U.S. shale oil and gas production. Ice and snow weather not only affects oil well operations, but also interrupts logistics and transportation, which may have an impact on crude oil supply.

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From other aspects of the supply side, on Wednesday, OPEC+, led by Saudi Arabia and Russia, held its monthly oil production policy meeting. The meeting reached a consensus in only 16 minutes, maintaining the original plan to increase production by 400,000 barrels per day in March. "Although OPEC+ increased production by 400,000 barrels per day as planned in March, the market is increasingly worried about OPEC+'s full production increase. The specific reasons are as follows. First of all, with the steady recovery of crude oil production, OPEC+'s spare capacity is only concentrated. In the hands of a few countries such as Saudi Arabia, the gradual exhaustion of idle production capacity has led to a bottleneck in the recent increase in production in major countries; secondly, preliminary statistics from the Russian Ministry of Energy show that Russia’s crude oil production in January was lower than its production quota; thirdly, Nigeria and other West African oil-producing countries The continuous increase in production is less than expected." An Ziwei said.

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In addition to the less-than-expected increase in production in the OPEC-producing countries, the supply-cutting incident in the OPEC oil-producing countries has further exacerbated the instability of the crude oil supply side. A few days ago, Libya's Waha Oil Company said it had to cut production by about 100,000 barrels per day because it could not maintain storage tanks. Affected by the domestic situation and weather, Libya's oil production has fallen sharply since mid-December 2021. Data show that in January, Libya's crude oil production fell by about 140,000 barrels per day, offsetting the increase in production by most OPEC producers. , the blockade of oil fields and the lack of maintenance of port infrastructure will continue to affect Libya's crude oil supply.

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Compared with the supply side, the certainty of recovery on the demand side is higher. An Ziwei said: "The fact shows that the impact of the new coronavirus mutation on crude oil demand is weaker than expected, and the market pessimism is greatly improving. In addition, the demand decline affected by the epidemic and the season is more likely to recover in the future, and the market has not responded to the This is overly worrying. The focus is now shifting from demand to supply.”

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Looking forward to the future of oil prices. An Ziwei believes that "OPEC+ capacity bottleneck problem will always drag down the pace of normalization of its production capacity, and will further expose the problem of insufficient investment when the idle capacity is close to being released. At present, although the supply of shale oil in the United States is expected to recover moderately, However, low inventories and low idle capacity will continue to support oil prices, and international oil prices are expected to remain volatile and strong."

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In addition to the perspective of supply and demand, from a macro perspective, Xia Xia, executive partner of Shanghai Minghuan Asset Management Center, told a reporter from Securities Daily: "In March, June and September 2022, the Federal Reserve may raise interest rates, and after the interest rate hike, the Fed may raise interest rates. Gradually shrinking the table, from this perspective, although commodity prices are under pressure, considering the low crude oil inventories, there is still support below the oil price, and it is expected that the international oil price will fluctuate strongly.”