Crude oil shows a wide range of dynamic trends

According to the market situation, OPEC+ currently ignores the requirements of the United States to increase production, maintaining the previous production increase plan unchanged, although the United States and India, Japan, South Korea, the United Kingdom to release strategic oil reserves, but the release is not as expected
by the market.
At the same time, the epidemic situation in Europe has intensified again, causing market concerns
about the decline in crude oil demand.
Although the Fed is gradually advancing in tapering bond purchases, the expectation of raising interest rates in advance is strong, the dollar index is rising, and commodity prices are under pressure, but the fundamental support of crude oil during the year is strong, the tight balance pattern remains unchanged, the superimposed inventory is low, the space below is limited, and the future market will be dominated
by wide oscillations.

The market is worried about the demand outlook

Although the traditional autumn maintenance period in the United States and the hurricane season have ended, processing demand will gradually recover, but recently the epidemic in Europe has hit again, on November 19, Austria announced that it will start on the 22nd for a 10-day lockdown, and then reassess whether it needs to extend the 10-day lockdown
.
At the same time, the epidemic in Germany is also aggravating, and the low level of new daily confirmed cases in the world has rebounded, increasing the market's concerns
about the outlook for international crude oil demand.

Supply increased slightly

First, U.
S.
crude oil production is relatively stable
.
U.
S.
crude oil production was 11.
4 million b/d
in the week ended Nov.
12.
In the week ended November 19, the number of crude oil rigs in the United States was 461, and the number of drilling rigs continued to recover
steadily.
During the year, U.
S.
crude oil production was relatively stable due to capital expenditure constraints, and the hurricane season was over, and the weekly production data was little changed
.

Second, OPEC+ has a strong
willingness to raise prices.
Saudi Aramco's third-quarter net profit rose to 114.
1 billion riyals, up 158 percent
from 44.
2 billion riyals in the same period last year.
Because it is not in the interest of OPEC+ members to sharply increase production and lower crude oil prices, OPEC+ has maintained its December plan to increase production by 400,000 b/d, ignoring U.
S.
requests
for OPEC+ to increase production by 600,000-800,000 b/d in December, even under repeated U.
S.
pressure to increase production 。 In addition, from the perspective of OPEC crude oil production in October, crude oil production increased by 217,000 b/d month-on-month to 27.
453 million b/d, the implementation rate of production cuts rose to 119.
32%, and Saudi Arabia raised the official selling price of oil sold to all regions in December, which shows that OPEC+ has a strong
willingness to raise prices.

Finally, pay attention to the progress of the
US-Iran negotiations.
The IEA expects Iran could soon increase capacity by 1.
3 million b/d
if sanctions are lifted.
With high crude oil prices, Iran has become another measure
for the United States to suppress crude oil prices and affect market supply expectations.
Judging from the current progress of negotiations, although the negotiations between Iran and the European Union are advancing, Iran's new president is a hardliner, and the possibility of Iranian crude oil returning to the market within the year is relatively low
.

Inventory levels are low

U.
S
.
crude and refined product inventories remain low.
As of November 12, U.
S.
commercial crude oil inventories were 433.
003 million barrels, down 2.
101 million barrels month-on-month; Cushing crude oil inventories were 26.
598 million barrels, up 216,000 barrels month-on-month; gasoline inventories were 211.
996 million barrels, down 707,000 barrels month-on-month; distillate fuel oil inventories were 123.
685 million barrels, down 824,000 barrels month-on-month; aviation kerosene inventories were 37.
983 million barrels, up 86,000 barrels month-on-month, and crude oil and refined oil inventories were at a historical low for the same period
。

The United States will work with India, Japan, South Korea and the United Kingdom to release strategic oil reserves
.
The United States will accelerate the sales of 18 million barrels of strategic petroleum reserves approved by Congress, 32 million barrels of crude oil will also enter the transaction in the next few months, and the released strategic oil reserves will be replenished back to the strategic petroleum reserves
in 2022, 2023 and 2024.
India, for its part, will release 5 million barrels of crude oil
from the Strategic Petroleum Reserve.
The UK, for its part, will release 1.
5 million barrels of oil
from the Strategic Petroleum Reserve.
Japan, for its part, plans to release 4.
2 million barrels of strategic oil reserves
.
The ROK side agreed to participate in the joint release of the strategic oil reserve
.

However, the strategic oil reserves released by the United States can not meet the current global crude oil market supply and demand deficit, and the 50 million barrels are released in batches, and the greater impact on the current market is only 18 million barrels of accelerated sales, and India, Japan, and the United Kingdom release less strategic oil reserves, lower than market expectations, the impact is relatively short-lived, and the current released strategic oil reserves will be replenished
in the future.
The United States has released strategic oil reserves with other countries mainly to pressure OPEC+ to increase production, but OPEC has not made a clear statement on
this so far.

Based on the above analysis, US crude oil production is relatively stable, and OPEC+ has increased production slightly month by month in accordance with the production reduction agreement
.
Demand for crude oil processing at U.
S.
refineries gradually picked up, but the intensification of the epidemic in Europe led to weaker
demand expectations.
During the year, global crude oil supply and demand remained in a tight balance, and the space below crude oil prices was limited
.
As OPEC+ continues to increase production and demand will fall in the first quarter of next year, the global crude oil supply and demand pattern will change from tight balance to loose balance
.
If the production cut agreement is strictly enforced, OPEC supply will exceed Call on OPEC in the first quarter of next year, and OPEC+ will have to adjust
the current production cut agreement by the end of this year if it wants to maintain the current high oil prices.