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International Oil Review (11.18): OPEC Is In A Dilemma Due To The Progress Of The New Crown Vaccine, And The Surge Of The Epidemic Situation Suppresses The Short-Term Optimism, And The Oil Price Remains Stable On Tuesday, Followed By A Downward Trend

2020/11/18 15:35:00 0

On Tuesday, the meeting of the OPEC + Joint Ministerial Oversight Committee (jmmc) ended without recommendations, OPEC + takes a more cautious attitude because of the blockade measures taken by many countries to curb the rebound of the epidemic, the news of breakthrough in the new crown vaccine, and the rapid recovery of China's demand as the world's second largest oil consumer have injected momentum into the oil market demand outlook, making OPEC + more cautious. International oil prices closed mixed on Tuesday, with U.S. WTI crude oil December futures up 9 cents, or 0.22%, to $41.43/barrel, after hitting a high of $41.69/barrel in the intraday session; Brent crude oil January futures fell 7 cents, or 0.16%, to $43.75/barrel. ‍

Earlier, OPEC + discussed the postponement of production increase plan. As the rebound of the epidemic hit fuel demand, several representatives of OPEC + said that at present, OPEC + negotiations are focusing on delaying the oil production increase plan originally scheduled to start next year for three to six months. Saudi Arabia and Russia have already said publicly that they are considering whether to postpone the production increase originally scheduled for January next year. The leaders of Russia and OPEC even put forward the option of further increasing production reduction. Last week, however, a sharp rise in risk aversion was seen in the gold market as well as in the gold market. OPEC +'s delayed production increase plan is based on the assumption that if the new outbreak is not curbed and energy demand in many countries is limited, OPEC also lowered its global crude oil demand forecast in its monthly report. Oil ministers were optimistic and cautious about the strength of global demand after oil prices rose on the news of a breakthrough in the new cap vaccine.

Therefore, under the circumstances of sudden changes in the situation, the committee did not give clear suggestions on whether to promote the production increase plan as scheduled. At 21:00 Beijing time, OPEC + held a meeting of the Joint Ministerial Supervision Committee (jmmc). The meeting said that since May, global oil production has decreased by 1.6 billion barrels, and the implementation rate of the reduction in October was 101%; after discussing whether to postpone the production increase plan in January, the OPEC + ministerial joint monitoring committee told OPEC + to remain vigilant and respond to the demand of the oil market. The committee did not give clear recommendations on whether to push ahead with the production increase plan as scheduled. When the United Nations oil market recovery meeting is called for, it is necessary to be alert to the impact of the new oil market on the recovery of the oil market.

According to OPEC documents, two member states have decided to reduce oil exports and production. Angola initially plans to reduce oil exports to 1.145 million barrels / day in January, while UAE's oil production in October will decrease by 153000 barrels / day. Saudi energy minister Abdel Aziz said Asia's recovery looked resilient. Thanks to the UAE and Angola for the compensatory cuts. OPEC + must be aware of the extra oil coming back to the market. Since May, the world has lost 1.6 billion barrels of crude oil supply. OPEC + must be ready to act on market demands. The meeting of the OPEC + Joint Ministerial Monitoring Committee will end without recommendations and make a final decision on oil supply at its meeting from November 30 to December 1. ‍

At the same time, the dollar fell to a one week low, or 0.12%, in quiet trading on Tuesday, boosted by a second coronavirus vaccine and fed action. The oil market recovered earlier losses in the last 15 minutes of the end of the day after Fed chairman Powell said the Fed is committed to using all our tools to support the recovery until it is really done and done. Therefore, the market expects that the Federal Reserve Board and the United States Congress may take more measures to alleviate the economic damage caused by the new epidemic. Edward, senior market analyst, OANDA Moya said, "the key theme is still about the new outbreak and its short-term pressure, not only to the United States, but also overseas, which will force Congress or the Federal Reserve to take more action. Whether it is the stimulus measures after President-elect Biden takes office or the Federal Reserve takes more actions, the trend of the dollar is very clear: it will fall sharply."

In the following period of time, the optimism may not last long. The recent surge of new cases in the United States, the growing threat of a new round of economic blockade, and weak retail data have restrained the optimism brought about by the vaccine's expected breakthrough. The U.S. stock market fell from its record closing high on Tuesday. The Dow fell 0.56%, the S & P 500 fell 0.48%, and the NASDAQ fell 0.21%. In addition, after the oil market closed on Tuesday, API reported that U.S. crude oil inventory increased significantly last week, which exceeded expectations. As of November 13, US crude oil inventory increased by 4.2 million barrels to about 486 million barrels, and US crude oil imports increased last week Add 210000 barrels / day. Financial blog zero hedge said oil prices rebounded above $41 in the session, mainly due to the impact of OPEC + related news. API crude oil inventory report showed a larger than expected increase. Gary Cunningham, head of customer management and research at traditional energy, said prospects for the recovery of the new coronavirus were dim and concerns about the long-term impact of aviation fuel demand were growing. All of this will affect the overall global consumption demand, which will be a big blow to the economy and oil demand prospects. The market needs to experience a "dark winter" before the new crown vaccine really brings a turning point.