Crude oil wants to talk about "long story" analysts say it is difficult to get over $60

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Crude oil wants to talk about "long story" analysts say it is difficult to get over $60

China Securities Journal

Recently, a series of positive news hit the crude oil market: Hurricane Nate caused some US refineries to shut down, the Organization of Petroleum Exporting Countries (OPEC) said or take further measures to boost oil prices, Saudi Arabia plans to cut November crude oil exports, the United States or re-right Iran imposes sanctions.

The concentrated outbreak of the long story has caused the international oil market to recover quickly. As of yesterday, the US oil and cloth oil received three consecutive yangs.

The long story "concentrated outbreak"

For a long time, in the game of crude oil prices, crude oil supply was regarded as the most critical link. In this context, OPEC has repeatedly dominated the production and insured prices. Although it has been seized by the major oil producing countries such as the United States in the long run, the boost to the short-term oil market is very effective.

Recently, Hurricane has caused several refineries off the Gulf Coast to shut down. According to US government data, about 85% of crude oil production on the Gulf Coast has been forced to go offline due to Hurricane’s special effects, which is about 1.49 million barrels per day. . In the case of a decline in US crude oil supply, OPEC shot, frequently throwing a long story "bomb."

On Monday, OPEC Secretary-General Balkin said that due to OPEC's adherence to the production limit agreement, the oil market is rapidly rebalancing and the supply of refined oil has been almost completely eliminated. The agreement between OPEC and other oil-producing allies to agree to production cuts began in December last year.

"Whether at sea or on land, signs in recent months have shown that the crude oil market is returning to equilibrium, the destocking process continues, and oil storage tanks around the world are largely empty." According to reports, the OPEC Secretary General said so optimisticly. He also called on the United States, including shale oil, to join the ranks of the limited production quotation, and said that OPEC will consider meeting with US independent oil companies and hedge funds at the end of the year or early next year.

Barkins said that oil-producing countries may need to take further steps to sustain the recovery of the crude oil market until 2018. It is currently considering continuing to implement the production reduction agreement after the expiration in March 2018. In addition, OPEC will hold a decision meeting in Vienna on November 30 this year.

In addition, Saudi Arabia plans to cut its crude oil exports by 560,000 barrels per day in November, thereby supporting OPEC-led production cuts. This news also has a certain boost to the oil market.

For the "hype" of OPEC's production reduction theme, analysts believe that the market will return to calm after a short period of excitement.

Chen Tong, an analyst of crude oil and asphalt futures, said that OPEC’s oil market rebalancing goal is to reduce the OECD’s oil inventories to a five-year average. The organization will be based at the November Vienna meeting. The rebalancing situation determines whether to extend the production reduction agreement. At present, OECD oil inventories exceed the five-year average of 200 million barrels in the same period. There is still a large uncertainty in the inventory situation before the expiration of the first-quarter production reduction agreement. It is unlikely that OPEC will take further measures to reduce production in the near future. Boost the price of oil.

Huang Liqiang, an analyst at Jinshi Futures, said that due to the impact of OPEC frozen production and rising global demand for crude oil, the supply and demand of global crude oil is expected to reach a balance again at the end of this year, and this is the most fundamental factor for crude oil prices to stabilize and stabilize. However, the rebalancing of global crude oil supply and demand is very fragile, based on the lack of large-scale production of OPEC frozen production and US shale oil. Therefore, whether OPEC will extend the production reduction agreement is of great significance to the global crude oil price. If the production reduction agreement is extended, even if the production reduction is not increased, the overall focus of the crude oil price will be shifted upwards. Otherwise, the basis for the rise in crude oil will not be there, and crude oil prices may fall sharply.

What is the impact of “sanctions”?

According to foreign media reports, Trump will give a speech on Thursday, which may open the abolition of the Iranian nuclear agreement process and re-implement sanctions against Iran on the grounds that Iran does not comply with the nuclear agreement. Some analysts believe that if this is the case, global oil prices may skyrocket.

As a resource country with 10% of the world's oil, Iran's crude oil production accounts for about 3% of the world's total. Iran’s crude oil production in June last year increased from about 2.9 million barrels per day to about 3.6 million barrels.

What impact will Trump's sanctions theory have on the crude oil market?

Huang Liqiang said that the Trump administration’s policy is very radical and its attitude towards Iran is also very strong. However, at present, the Trump administration faces major issues such as tax reform and the North Korean nuclear issue. It is difficult to deal with various issues. Therefore, Trump’s statement means more deterrence and attitude. The Iranian nuclear issue is in the short term. The probability of a sharp deterioration is small. However, even if the Iranian nuclear issue is unlikely to deteriorate in the short term, market concerns will form a strong support for crude oil prices. At present, Iranian crude oil production is about 3.5 million barrels per day, accounting for 11% of OPEC's total output, accounting for 3.62% of global crude oil production. Once it is again sanctioned, the global crude oil supply and demand pattern will undergo major changes, resulting in Crude oil prices soared.

"The Trump administration's abolition of the Iranian nuclear agreement will lose its restrictions on the Iranian nuclear issue and is not in the interests of the United States as a whole. There is no consensus within the US government. In addition, the Iranian nuclear agreement involves China, Russia and Europe. The decision of the Ramp government will also face the international situation and the constraints of other countries. At present, Iran’s 2.3 million barrels per day of crude oil exports account for 25% and 60% of European and Asian buyers, respectively. The market needs to assess the impact of crude oil exports based on specific shipping restrictions," Chen Tong said.

Will the $60 bet be lost?

Under the continuous bombardment of the long story, the crude oil market once again showed a "smiley face", stood at $50/barrel and entered the $60. As of yesterday, Brent crude oil main contract traded at 57 US dollars / barrel, the US crude oil futures main contract reported near 51.3 US dollars / barrel, the intraday bulls strong.

Although oil prices have recently encountered resistance at the $60/barrel line, there are bold investors who have already placed more than $100/barrel. Relevant data show that as of the week of October 4, in the crude oil market, the crude oil call in December 2018, the strike price is $100 per barrel, and the open interest is mad within a week. 11477 lots, the most popular option for trading, is the 60,000-year-old crude oil call right that expires in December 2017 and has a strike price of 60 US dollars.

In other words, a large number of investors optimistic about crude oil will break through the $60/barrel line, and even some investors believe that crude oil is up to $100 per barrel. A K-line change, we must know that since the crude oil plummeted in July 2014 and fell to $30 per barrel in 2016, few people believe that crude oil prices will return to more than $100.

How big is optimism?

Looking at the fourth quarter of this year, Huang Liqiang believes that crude oil will continue to be strong, but the upside is not large, or it will be changed to a shock. On the one hand, OPEC will continue to reduce production for its own benefit, which will support crude oil prices; the US interest rate hike will slow down, the US dollar will weaken, and support commodity prices; in addition, entering the winter, the heating oil consumption season will come, further alleviating the imbalance between supply and demand. The problem. On the other hand, as crude oil prices rise, US shale oil production may rise further, which in turn will limit crude oil price increases. In addition, once the price of crude oil rises sharply, there may be a private increase in production within OPEC, which also determines that crude oil prices are difficult to continue to rise.

Chen Tong said that from the static balance sheet, the oil market in the fourth quarter will continue the destocking process. At present, the WTI far-month price is suppressed near the marginal cost of shale oil of 52 US dollars/barrel. According to the optimistic estimate that the OECD oil inventories will fall back to the 5-year average at the end of the fourth quarter, the price of WTI will be able to rise by 5% in the recent month. 10%, still difficult to break through $60/barrel.

Enter [Sina Finance and Economics Unit] Discussion

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