The oil price plummeted by 4%. The increase of US crude oil inventory was larger than expected. Saudi Arabia may slightly reduce the price of crude oil in December-HANDE(Jiangxi) Science and Technology Co.,LTD.-Oil Filter

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The oil price plummeted by 4%. The increase of US crude oil inventory was larger than expected. Saudi Arabia may slightly reduce the price of crude oil in December

Release time：

2021-09-15

At 19:30 on October 29, Beijing time, the price of NYMEX crude oil futures fell sharply, falling to US $35.76/barrel at one time during the session, down 4%. ICE Brent crude oil futures fell to US $37.53/barrel, down 3.36%. The two markets closed down 3.98% and 3.79% respectively on the previous day, and both reached new lows since October 2, reaching US $36.97/barrel and US $39.23/barrel respectively.
Chen Tong, an analyst at Yide Futures, told the China Times that on October 28, the US Energy Information Administration (EIA) regularly released the US commercial crude oil inventory data. The increase of crude oil inventory greatly exceeded the market expectations, and the output growth reached a record high. The international oil market suffered a slump. According to the data released by the US Energy Information Administration, the crude oil inventory increased by 4.32 million barrels to 492.4 million barrels in the week ended October 23, far higher than the increase of 1.5 million barrels expected by analysts. This also proves that the supply of crude oil is becoming more and more surplus. Last week, the output surged to the highest level since July, to 11.1 million barrels per day, with a weekly increase of 1.2 million barrels per day, the highest weekly increase on record.
At the same time, in addition to the impact of the US inventory data, the sharp drop in oil prices triggered the deep decline of the market. It was also the increasingly serious form of the epidemic in Europe and the United States, especially the counterattack of the epidemic in France and Germany in the European region. The government restarted the restrictions, which created unprecedented pressure on the future demand for crude oil. It is reported that French President Malone said in his speech to the whole country on October 28 that France will re implement the blockade measures nationwide from this week to curb the spread of COVID-19. At present, the epidemic is in danger of losing control again.
The new measures announced by Makron will take effect on Friday and continue until December 1. Measures include: people should stay at home unless they buy necessities, see a doctor or exercise for one hour every day. At the same time, German Chancellor Angela Merkel also said that Germany would implement a one-month emergency blockade measures, including closing restaurants, gyms and theaters, to reverse the surge in the number of new cases. This wave of infection may overburden hospitals.
Although leaders of all countries are eager to avoid the serious damage caused by the blockade measures, the new restrictions reflect people's awareness of the rapid spread of the epidemic from Spain, France and Germany to Russia, Poland and Bulgaria. The situation in the United States is not optimistic. The new round of fiscal stimulus policy has been basically determined not to be launched before the general election. The market panic has soared, and the stock market has plummeted. The three major stock indexes in the United States have all dropped by more than 3%. The Dow Jones index has dropped by 940 points, the largest one-day decline since June. Major European stock indexes also fell more than 2%. Risk assets suffered a lot of selling, and the stock market and oil market fell in resonance.
When the recovery of European demand stopped due to the rebound of the COVID-19, Libya's production increased faster than expected. In the face of this situation, UBS cut its Brent oil price expectations by $5/barrel for each period up to the third quarter of 2021. In the report, analysts such as Giovanni Staunovo and UBS lowered the Brent oil price expectations at the end of December this year, the end of March next year, the end of June next year and the end of September next year to $40, $45, $50 and $55 respectively.
The decision of European leaders to re-execute the anti-epidemic blockade policy may lead to a significant reduction in the demand for crude oil from France and Germany. Libya's faster than expected output also has further downward pressure on oil prices. In addition, Chen Tong said that a survey on Thursday showed that Saudi Arabia might maintain or slightly reduce the official price of crude oil for the Asian market in December, after the decline in the benchmark crude oil price and refining profit margin in Dubai.
According to the survey, three of the six Asian buyers expect that the price of Saudi Arabia's flagship light crude oil will be reduced by 10-20 cents per barrel in December compared with the previous month, and two expect that the price will be flat. As the price difference between gasoline and crude oil declined from last month, the weak profit margin remains the main concern of Asian refiners. However, diesel, aviation fuel and fuel oil margins have improved.
At present, only one respondent expects Saudi crude oil prices to rise by 40 cents in December, due to strong demand for oil products in Asia this month. China's demand also pushed up the price of DME Oman crude oil, another benchmark of Middle East crude oil, this month. Saudi Arabia usually announces the official price of crude oil on the fifth working day of each month, which will determine the price trend of crude oil from Iran, Kuwait and Iraq, and affect more than 12 million barrels/day of crude oil shipped to Asia.
Saudi Aramco, the oil giant, calculates the change of oil value in the past month based on the output and product price, and then sets the crude oil price according to the customer's suggestions. Saudi Aramco does not comment on the official monthly price of crude oil for policy reasons.