[At the beginning of the crude oil market] multiple negative pressures to suppress oil prices, the market to be EIA guidelines

Huitong Network October 13th - Thursday (October 13) crude oil at the beginning of the oil price continued to decline. US oil traded at around US$49.80/barrel, a drop of about 0.76%; oil oil traded around US$51.51/barrel, a drop of about 0.37%. The OPEC and non-OPEC oil-producing countries meeting held on Wednesday did not make new progress. The OPEC monthly report showed that OPEC production reached a new high in September, and the US API crude oil inventories unexpectedly increased by 2.689 million barrels, combined with factors such as the strengthening of the US dollar. Pressure. The market is waiting for the EIA monthly short-term energy outlook report and the EIA crude oil inventory report.



Wednesday (October 12) WTI November crude oil futures fell 0.61 US dollars or 1.2%, to 50.18 US dollars / barrel. Brent December crude oil futures fell $0.60 or 1.1% to $51.81 per barrel. Reuters analysis said that oil prices fell more than 1%, or OPEC monthly report shows that OPEC September crude oil production reached an eight-year high, offset the market's optimism about the organization's commitment to alleviate the global crude oil supply problem. The US dollar index also recorded a seven-month high on Wednesday and broke the 98 mark, which weighed on commodity prices. In addition, the US EIA crude oil inventories will increase last week, which also put pressure on oil prices.


(The picture above shows the daily chart of the November contract price of US NYMEX crude oil futures)


(The picture above shows the daily chart of the December contract price of Brent crude oil futures)

OPEC and non-OPEC oil producers held an informal meeting in Istanbul on Wednesday to discuss the implementation of the Algiers agreement. The Energy Ministers of Qatar, the United Arab Emirates, Venezuela and Russia also held a closed meeting with the Secretary-General of OPEC.

OPEC Secretary-General Balkin said that it is still uncertain whether OPEC countries will take the lead in reducing production before non-OPEC countries join.

Russian President Vladimir Putin said that Iran and Saudi Arabia have become more similar in terms of frozen production. Russia will consider cutting production, but there is no need to do so. There is no obstacle to a global consensus on crude oil production. Reiterate Russia's readiness to join the frozen oil production. Under current conditions, crude oil production will bring growth to Russia and the world economy.

Russian Energy Minister Novak said that Mexico and Russia are the only two non-OPEC countries participating in the Istanbul meeting. I hope that the major non-OPEC countries can be invited. The United States will be invited to attend the Vienna Conference. Discussions on production may take place after the October 28-29 meeting. There was no discussion on the target of crude oil output on Wednesday. The exchange of views on Wednesday was constructive. The October 29th meeting will discuss technical aspects to develop a road map. Russia is invited and will attend the next meeting. The Vienna meeting on October 29 will be dedicated to joint planning. The talks focused on the current state of the market and possible future initiatives.

Venezuelan oil captain Pino said that some non-OPEC countries were invited to attend the Vienna meeting on October 28-29. Non-OPEC countries agree to cooperate on the crude oil agreement. I am optimistic about the talks on Wednesday.

Venezuelan President Maduro said that Russian President Putin promised to stabilize the oil market. The agreement reached by the oil-producing countries will bring oil prices back.

UAE oil chief Mazrui said that Russia’s promise is a positive sign. More countries are expected to join the talks in Vienna. All oil producing countries have a responsibility to maintain oil market stability, including the United States.

Qatar’s oil minister said that the Istanbul talks were informal discussions, and the talks on Wednesday had a positive mutual understanding. OPEC and non-OPEC countries would establish good cooperative relations. Discussed the road map of OPEC and non-OPEC balanced crude oil market. Excessive inventory has prevented oil prices from returning to fair value. Not sure if the US will participate in the discussion of the technical aspects of the oil market. In addition, Qatar’s oil minister also said that although we cannot speak on behalf of Iran, Iran and Libya will receive special treatment.

From the perspective of supply and demand fundamentals, data released by the American Petroleum Institute (API) at 4:30 am on Thursday showed that US API crude oil inventories unexpectedly increased by 2.689 million barrels in the week ended October 7, recording the largest increase in six months. API gasoline stocks increased by 688,000 barrels, while API refined oil stocks decreased by 4.517 million barrels. API Cushing stock also recorded an unexpected decrease of 1.352 million barrels.

The famous financial Zeroohedge commented that after the US crude oil inventories continued to decline for six weeks, the US API crude oil inventories finally recorded an increase again, and the inventory growth recorded the largest increase since April, while refined oil inventories recorded 2014. The biggest drop since October.
According to Valero Energy, the refinery fuel demand in North America and Europe is gradually declining. The flexibility of crude oil resources should be enhanced.

In addition, after the IEA monthly report of the International Energy Agency showed that OPEC oil production hit a record high again in September, the OPEC monthly report released on Wednesday showed that its oil production in September increased by 220,000 barrels per day to 33.39 million barrels. /day. Although Saudi Arabia’s oil production recorded the largest decline, the “significant reduction” of 88,000 barrels per day fell to an output level of 10.49 million barrels per day, but the increase in production in other oil producing countries offset the reduction in Saudi production, which ultimately led to OPEC's overall oil production has once again set a record high.

From the perspective of market linkage, the market's expectation of the Fed's interest rate hike is heating up, and the US dollar index has once again oscillated and strengthened. It once broke through 98 and hit a seven-month high. A stronger dollar also put pressure on dollar-denominated oil prices.

From market expectations, well-known hedge fund manager Pierre Andurand said that the market now ignores the point that Saudi Arabia will make adjustments because they want higher oil prices. The market is now too concerned about the problem of excess supply of crude oil. Crude oil fundamentals have improved, for example, US crude oil inventories have been decreasing since April. If the oil price reaches $60/barrel and above, the US shale oil producer will increase production. Oil prices are expected to reach $70/barrel by the summer of 2017. Oil prices are expected to reach $60/barrel by the end of the year.

Energy consultancy Tradition Energy analyst McGillian said that the former OPEC reached an agreement that the price of oil will rise steadily above $50/barrel, but now it is more important to pay attention to whether OPEC really follows the actual production reduction target. If the oil producing country does not comply with the target, the uptrend will not be sustainable. At present, the fundamental trend of oil prices is showing signs of deteriorating.

ANZ said that although OPEC is committed to a plan to reduce production, based on the current prospects for US crude oil inventories, the market's confidence in rising oil prices has weakened.

The EIA monthly short-term energy outlook report will be released from time to time, and investors should pay close attention.

In addition, due to the impact of the US holiday, the US EIA crude oil inventory report was postponed until 23:00 Beijing time on Thursday. EIA crude oil inventories will be excluded from the rental inventory since this week. The current EIA crude oil inventories are about 500 million barrels, and the leased inventory will be about 31 million barrels. However, given the small changes in lease inventory, it will not be removed after the removal. EIA crude oil inventory changes and investors' concerns are too much impact, and EIA will re-release or provide revised crude oil inventory historical data for reference.

According to a preliminary investigation by Reuters, the nine analysts surveyed expect that EIA crude oil inventories will increase by 300,000 barrels in the week of October 7th, which will end the trend of five consecutive weeks of decline; gasoline inventories are expected to decrease by 1.6 million barrels, while refining Oil stocks will be reduced by 1.5 million barrels.

As of 9:57 Beijing time, WTI crude oil reported $49.80/barrel; Brent crude oil reported $51.51/barrel.

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