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Trade disputes curb energy demand, oil prices have fallen for two weeks

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发表于 2018-10-22 13:49:12 | 显示全部楼层 |阅读模式
On Monday (October 22), the Asian oil plate was under pressure of US$70. Investors may continue to focus on global supply in the coming week, after oil prices fell for the second consecutive week, as there are signs that US crude oil inventories have increased, which is the fourth consecutive week of EIA crude oil inventories.
Up to now, US oil is now reported at 69.34 US dollars / barrel, the day rose 0.09%; Brent crude oil is now reported at 79.77 US dollars / barrel, a decline of 0.01%. WTI crude fell below $70 and hit a one-month low, and the rebound in oil prices seems to be losing momentum.

At the same time, Baker Hughes Energy Services said on Friday that the number of US oil rigs increased by 4 this week to 873, the highest since March 2015.

In addition, oil traders will also pay close attention to the geopolitical tensions between Saudi Arabia and the United States, the main member of the OPEC. Saudi Arabia has previously stated that it will be “firm, capable and willing” to ensure that there is no shortage in the oil market.

Global trade disputes curb energy demand
Affected by the continuous decline in Iranian crude oil production and the peak demand in winter, the supply gap in the market is gradually expanding. Therefore, it is unlikely that the United States will impose sanctions on Saudi Arabia.

As the US mid-term election officially entered the countdown (November 6), the high oil price was unfavorable to Trump’s Republican Party. Therefore, the real intention of the United States is likely to take the opportunity to increase the bargaining chip and further demand that Saudi Arabia increase production, thus cooling the oil market.

Once the relationship between the US and Saudi Arabia breaks down, Saudi Arabia may refuse to increase production, which will once again lead to a sharp rise in oil prices. Investors suspect that the latest developments may weaken the leadership of Crown Prince Salman and may eventually shake the oil-rich kingdom.

There are signs that global trade disputes have curbed economic activity and eroded energy demand, which has nothing to do with market sentiment. The continued weakening of global stock markets is also the driving force behind the decline in oil prices last week.

A new round of sanctions in the US and Iraq is imminent
U.S. Treasury Secretary Nuchin said on Sunday that it would be more difficult for countries to get exemptions from Iran’s oil sanctions than the Obama administration, and ignore the fear that oil prices may rise, saying the market has already digested the losses.

The United States decided to impose a second round of sanctions on Iran on November 4, trying to seal Iranian crude oil exports. Nuchin said in an interview that countries must reduce Iran’s oil purchases by more than 20% in order to be exempt.

Earlier, US President Trump withdrew from an agreement reached in 2015 between Iran and six world powers to prevent Iran from developing nuclear weapons.

Due to the impact of sanctions, Iran’s oil exports may fall by as much as two-thirds, putting pressure on the oil market. Mchin insists that countries will eventually have to cut imports to zero. The Iranian side stated that it complied with the 2015 nuclear deal.

The purpose of the sanctions is to force Iran to stop participating in regional conflicts in Syria, Yemen and Iraq and to stop its ballistic missile program.

Although Iran believes that during the rest of Trump’s term, it can evade the serious economic damage caused by US sanctions to Iran, but Mchin expects the Iranian economy to exit the Iranian market as major companies fear US retaliation. Was significantly affected.

Oil market winter prospects
The winter oil market is often characterized by demand for diesel fuel, especially in the northern hemisphere, making the market for products more susceptible to developments associated with the middle of the barrel. In 2017, refining margins weakened during the winter, and the product market was mainly supported by strong gasoline demand.

In non-OECD countries, strong economic growth (especially in India and China) has been supporting industrial activities such as heavy equipment operations in mining, agriculture and power generation, as well as passenger and commercial transport. In 2018, diesel fuel growth in India continued to be strong and the demand for residential LPG continued to improve.

In China, LPG and gasoline are engines of demand growth, and seasonal agricultural activities will provide further support for diesel demand in the coming months.

In addition, due to lack of investment, refining capacity constraints in Latin America and Africa are likely to continue to encourage product imports, providing additional support for global gasoline and middle distillate crack spreads. However, the current weakness in some emerging market currencies and the reduction in subsidies may have a negative impact on demand for crude oil in emerging markets in the coming months.

Looking ahead, based on current market developments, there is expected to be some weakness in the global product market compared to the same period last year. In Europe, as diesel-powered vehicles are still subject to scrutiny, it is expected that gasoline cracks will continue to be under pressure. At the same time, it is expected that there will be some reverse gains in the gasoline market in the region, providing moderate support for other markets that soften European products.

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