Will international oil prices lose the $ 90 mark, will it continue to fall sharply?

21st Century Business Herald reporter Wu Bin Shanghai report

With the increasing concern of the market's economic recession, Brent crude oil and WTI crude oil have both fell back to the level before the Russian and Ukraine conflict, and the US WTI crude oil has lost the $ 90 mark.

On August 4, Eastern time, US crude oil futures settlement prices fell 2.34%to $ 88.54/barrel, setting the minimum closing level since February 2. The settlement price of Brent crude oil futures fell 2.75%to $ 94.12/barrel, setting the minimum closing level since February 18.

In contrast, the day before the outbreak of the Russian and Ukraine conflict, Brent crude oil was closed at $ 96.84/barrel on February 23, and WTI crude oil was closed at $ 92.10/barrel.

Regarding the reasons why international crude oil prices fell back to Russia and Ukraine's conflict, Zhu Runmin, a senior economist in the oil industry, told reporters from the 21st Century Business Herald that the market has basically digested the impact of oil supply caused by the Russian and Ukraine conflict, and then superimposed the global high inflation to the Federal Reserve with the Federal Reserve The representative of the European and American central banks hopes to control inflation through interest rate hikes, which will induce market concerns about the decline of the world economy. Secondly, the appreciation of the US dollar also has a significant inhibitory effect on the price of international crude oil measured at the US dollar. From February 24 to August 4, 2022, the US dollar index rose by nearly 10%. Third, as the price of coal and natural gas continues to rise, the historical high history has a certain inhibitory effect on international crude oil prices. Coal and natural gas power generation focuses on basic demand, relatively rigid, and when people's income is relatively stable. The increase in the expenditure of basic demand has risen significantly, which will inevitably squeeze the expenditure of non -basic demand.

The funding factors also affected oil prices. Wang Youxin, a senior researcher at the Bank of China Research Institute, told reporters of the 21st Century Business Herald that recently, oil prices have fallen into the influence of both economic fundamentals and the retracement of financial speculative capital. Among them, the existence of financial speculative factors has enlarged the fluctuation of crude oil prices, and the changes in economic fundamentals have become an important driving factor in market emotional changes.

Regarding the future, Wang Youxin predicts that with the deduction of liquidity and the retreat of financial investment capital, the trend of crude oil will be more determined by the fundamental fundamentals. In the future, the volatility may be narrowed. The growth of the economy continues to fall, the monetary policy is further tightened, the demand for crude oil will be further reduced, and the possibility of oil prices will still fall.

On the other hand, although the recession is concerned about the anti -energy demand, the tension of the supply side is still expected to provide support for oil prices, and international oil prices are still much higher than the low position in the past years.

Before international oil prices fell back to Russia and Ukraine's conflict

In March of this year, the Russian -Ukraine conflict once helped the Brent crude oil and WTI crude oil both breaking the high level of $ 130 per barrel, both of which hit a new high since 2008.

However, as the European and American central banks continue to raise interest rate hikes to resist inflation, the risk of economic recession has also been heating up, and international oil prices have fallen back to the level before the Russian -Ukraine conflict. For example, the Bank of England admits on August 4 that the British economy is expected to enter the recession from the fourth quarter of this year. The economic recession will last for five quarters. The longest period of recession will continue to be the financial crisis. It is expected that GDP will shrink by about 2.1% Essence

In addition, the U.S. economy has shrunk for two consecutive quarters to enter "technical decline". Looking forward to the third quarter, industry insiders have also been worried about the US economic prospects.

Bank of America's US chief economist Michael Gapen predicts that the US GDP in the third quarter will once again decrease by 0.5%, and then keeps shrinking until early 2023. Gapen pointed out that as inflation increases the cost of food, energy and other necessities, consumers feel the impact of actual income, which will further crack down on consumer confidence.

Wang Youxin analyzed reporters that the recent significant decline in oil prices mainly reflects the reality of downward pressure and liquidity tightening of global economy. On the one hand, although there are still bottlenecks on the supply side, the growth rate of demand is gradually promoting the return of crude oil supply and demand. According to the latest forecast of the International Energy Agency in July, it is expected that the global oil daily demand this year will increase by 1.7 million barrels, a decrease of 100,000 barrels from the June forecast, and the impact of economic growth under the economic growth of Europe and the United States will gradually appear on demand. From the perspective of the supply side, OPEC+agrees to increase the output of 100,000 barrels of crude oil every day in September. It is expected that the output of crude oil by the end of the year will increase by 1.8 million barrels per day. The imbalance between crude oil supply and demand may gradually be relieved and promote the decline in crude oil prices. In addition, after the Russian -Ukraine conflict, the price of crude oil has risen rapidly. This part is due to the promotion of speculative capital. With the tightening of global liquidity and the improvement of crude oil supply and demand, speculative funds have gradually retracted, and crude oil prices gradually return to fundamental dominance. Essence

Overall, in recent months, the extremely tight oil market has also eased. In recent months, the contract premium has declined, and so far, there have been no signs that international sanctions have caused a substantial blow to Russian crude oil exports.

The fundamentals do not support oil prices to continue to fall

Although oil prices have fallen recently, it is more concerned about the future economic recession. In fact, the global market is still tight, and the fundamentals of the oil market are still good, and it is unlikely to continue to fall.

For example, the price of Arab light crude oil that Saudi Arabia will be shipped to the Asian refinery in September has increased by 50 cents compared with August, making the overall price higher than Aman-Dubai Kikuki crude oil 9.8 US dollars per barrel, setting the highest premium ever in history.

As Saudi Arabia is the world's largest oil exporter, most of the crude oil is sold to Asia, and the monthly pricing decision of Saudi Arabia is also regarded as the vane of the oil market. Jeff Currie, the chief commodity analyst of Goldman Sachs, believes that despite the slowdown in demand, due to lack of investment in many years, the supply is still seriously limited, and market demand is still higher than supply. At present, it has maintained 1 million barrels/day supply and demand deficit. Regarding the impact of economic slowdown, the obvious characteristics of deep decline are the rise in futures. At present, it has not been seen. The price of crude oil futures is still lower than the spot price.

Although the demand is gradually weakening, the lack of supply is still a key force to support oil prices. On August 3, local time, OPEC+agreed to increase the daily output of 100,000 barrels in September, setting the smallest increase in history. The actual output is far lower than the target output.

The reason behind this is that the idle production capacity of OPEC member states is generally very low. Due to the lack of investment in new capacity for many years, most member states have been weak on the issue of increasing production. According to data from the International Energy Agency (IEA), the idle capacity of the Middle East has dropped to the "extremely micro" level, about 2 million barrels per day, accounting for only 2%of global demand.

Bank of America believes that even if OPEC+has achieved the latest output targets, it may not be enough to calm high oil prices, because the upper limit of the price of Russia's oil setting in Europe and the United States may lead to Russia's counterattack: reducing production and reducing confession. "Although people are beginning to worry about decline and push down oil prices, the fuel substitution effect and sanctions on Russia may bring up risk of oil prices. The EU/the United States set the upper limit of oil prices in Russia, which may cause Russia to reduce production and push Brent crude oil prices prices Up to $ 130 per barrel. "

In general, despite the recent decline in oil prices, in view of the fact that the supply problem has not been resolved, analysts generally believe that the fundamental fundamentals of the oil market are in good fundamentals, and there will be limited room for decline in the future.

Zhu Runmin looks forward to the probability that the supply and demand status of the oil market is relatively tight if there is no serious economic recession. If the world economy has a serious decline and demand is largely decline, the supply and demand will be relatively loose, but no matter what, there will be no way to reduce the production of tens of millions of barrels of crude oil per day in the future. Essence

Even in the worst case, it is difficult for international oil prices to return to the past. Zhu Runmin predicts that the space for international crude oil prices and the time for low -level operations is expected to be very limited. It cannot be ruled out that WTI crude oil is further dropped to $ 80/barrel, or even 70 US dollars/barrels, but $ 60/barrel should be a very low and unsustainable level. s level.

Wall Street Investment Bank also has a relatively positive attitude towards oil prices. Morgan Stanley pointed out that on the one hand, the supply of crude oil market is still tight, and on the other hand, high oil prices have begun to destroy demand, coupled with factors such as interest rate hikes and recession, supply and demand will gradually balance, and oil prices will begin to fall. After the economy recovers from decline, oil prices will rise again. Morgan Stanley reduced the oil price prediction value of the third quarter of this year to $ 20 to $ 110/barrel, and in the first quarter of 2023, the oil price was reduced to a minimum of 95 US dollars/barrel, and then rose to $ 110/barrel in the second half of next year.

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