Global Oil Supply Basically Remains Balanced

International Energy Network News: Since the fourth quarter of 2010, international oil prices have experienced a breakthrough increase. This year's increase has been even more prominent, successively breaking through important levels such as US$90, US$100, and US$110. Currently, the price of crude oil futures in New York reaches US$110. Although it has not exceeded the historical high of US$147.27 created in July 2008, it has set a new historical record after the financial crisis, rising by about 20% from the beginning of the year. Under the combined effect of multiple factors, oil prices may rise further.

There are two main reasons for this sharp rise in international oil prices: First, the weak U.S. dollar has provided support to the commodity market. Under the influence of the Federal Reserve’s second round of quantitative easing monetary policy, the U.S. dollar index has continued to decline this year. 4 In March, it broke through the previous low. As of May 4, the U.S. dollar exchange rate fell 7.8% from the beginning of the year and 16% from the end of June last year.

Secondly, as the global economy picks up, speculative forces quickly regain their strength, adding fuel to the flames and amplifying commodity price increases. The political situation in the Middle East and North Africa has continued to be turbulent since March, riots occurred frequently in Arab countries, the international financial market environment has become more complex, and panic has further spread. , international speculative funds further adjusted their position structure out of the need for hedging, and turned to buying more risk-averse products such as crude oil, pushing commodity prices close to record highs.

Since the global financial crisis, the U.S. dollar exchange rate, speculative funds, political changes, etc. have gradually taken a dominant position among the factors affecting crude oil prices. However, from the perspective of the future, after experiencing a sharp rise in a short period of time in the early stage, the factors that dominate the international oil price trend in the later period may change from external factors to a situation where both external factors and fundamentals are given equal emphasis.

Global crude oil demand will remain stable and increasing this year, but the supply and demand situation is not tense. On April 12, the International Energy Agency (IEA) stated that global crude oil demand this year was 89.4 million barrels per day, a year-on-year increase of 1.6%.

In the short term, as the weather gradually gets warmer, the demand situation during the later peak season of gasoline consumption needs to be focused. The summer oil consumption peak will support international oil prices.

In the long term, Japan's post-disaster reconstruction and the replacement of nuclear power with petroleum energy are new factors in oil demand. Some institutions predict that Japan's crude oil imports will increase by 230,000 barrels to 600,000 barrels per day in the future, and will last for approximately 4 to 6 months. time.

But this does not mean that global crude oil supply is tight. On April 9, a representative of Iran’s Organization of the Petroleum Exporting Countries stated that not only was there no shortage of supply in the crude oil market, but it was also oversupplied by about 1 million barrels per day.

On April 17, the UAE Minister of Energy also emphasized that the current crude oil supply can fully meet the international market demand, and the current increase in oil prices has nothing to do with market supply and demand.

Currently, U.S. commercial crude oil inventories are approximately 357 million barrels, slightly higher than the same period in 2010. Based on previous years, crude oil inventories are expected to reach the highest level in the year in May. After that, the decline in U.S. crude oil inventories may become a new factor affecting the trend of international oil prices. factor.

At the end of April, the Federal Reserve announced that it would keep interest rates unchanged in the range of 0~0.25% and reiterated that it would maintain low interest rates for a long time. The U.S. dollar index immediately plunged sharply, hitting a three-year low during the session.

In the future, the U.S. dollar may accelerate depreciation and may exceed market expectations. Some institutions predict that it may fall below the lowest point of the financial crisis in 2008. The recent killing of bin Laden by the US military will only boost the dollar in the short term and will not change the general trend of dollar depreciation.

The dollar's decline will undoubtedly continue to provide strong support to the prices of commodities, including crude oil.

Through tracking and analysis of non-commercial position data of New York crude oil futures, some institutions believe that the international oil market in 2010 was dominated by speculative funds.

Judging from the current trend, although Obama signed the most stringent and comprehensive financial regulatory reform bill since the "Great Depression" on July 21 last year, the impact of the new financial regulatory bill on speculative funds is still difficult to be reflected in 2011, especially for the US dollar. It is difficult to fundamentally change the situation of continued weakness and flooding of international and domestic liquidity. Speculative forces are still expected to continue to affect the international oil market in 2011.

Some early research results believe that the geopolitical situation in oil-producing countries will push up oil prices to US$10 to US$20 per barrel. The continued escalation of unrest continues to raise concerns about crude oil supply.

The current situation in Libya is turbulent and there is still no hope of ending it in the short term. The situation in Libya may trigger political instability in other North African countries and the Middle East. Once it spreads to the Middle East and affects major oil-producing countries, it may push up oil prices again.

Recently, people in Syria have launched protests again, and riots have also occurred in Nigeria, Africa's most populous country and a major oil-producing country. In the next few months, especially in the short term, the trend of international oil prices will mainly be determined by the political situation in these regions.

In the longer term, geopolitical factors are expected to weaken, and the market will turn to focus on demand-side factors in the later period.

After a sharp rise in the early period, it is becoming more difficult for crude oil prices to rise significantly in the short term. To break through the previous historical highs, many of the above factors need to be positively superimposed on each other.

In 2010, my country's dependence on foreign oil was 53.8%, and it exceeded 55% for the first time in the first two months of this year.

According to customs statistics, in the first quarter of this year, my country's crude oil imports reached 63.42 million tons, a year-on-year increase of 11.89%. In March, the unit price of my country's crude oil imports reached 99.67 US dollars/barrel, the price was second only to the second and third quarters of 2008.

At present, China's crude oil import sources are too concentrated. The import source mainly relies on the Middle East, accounting for more than 50%. Imported oil from Africa also accounts for a large proportion, and these places have always been politically unstable areas, which has a negative impact on the price of my country's imported crude oil. The impact is greater.

In October last year and in February and April this year, my country raised the price of gasoline and diesel three times in a row, with a cumulative price increase of 1,080 yuan and 970 yuan per ton of gasoline and diesel. Recently, international oil prices have continued to maintain high levels and are now close to the price adjustment window for domestic refined oil products again.

In the first four months of this year, my country's CPI remained at a high level of 5%. The main external reasons were the high prices of international commodities such as agricultural products and crude oil. The most important ones were agricultural products such as oils and greases and cotton.

In the future, the impact of rising international oil prices on my country's CPI may gradually become more apparent in the coming period.