Since November 2020, international oil prices have formed a unilateral rise, and the upward trend in 2021 will continue. In the past two and a half months, the US West Texas Intermediate Base crude oil futures and Brent crude oil futures prices have increased by about 60%, setting a new high since February 2020. In the course of this wave of crude oil prices, vaccine benefits run through it and are the strongest support. Saudi Arabia unexpectedly announced a production cut, further strengthening crude oil bullish expectations. In general, the crude oil market has a strong bullish atmosphere, and the general direction is still very strong.
Vaccines continue to boost crude oil trends. Since Pfizer announced on November 9 last year that its new crown vaccine can prevent 90% of new crown virus infections, the three major US stock indexes have continuously set new record highs, while crude oil has continued to strengthen, breaking through key resistance levels one after another. At present, more and more countries have signed vaccine supply agreements with pharmaceutical companies, and vaccination work continues to advance. Although individual allergies and even deaths were reported during the vaccination period, and the progress of vaccination in the United States was slower than expected, it did not have much negative impact on market sentiment. The positive vaccines still provided strong support for risk assets.
In the context of the severe impact of the epidemic on the U.S. economy, coupled with the pressure of members of Congress, at the end of December 2020, Trump signed a 900 billion U.S. dollar epidemic relief bill. In addition to providing assistance to alleviate the impact of the epidemic on the economy, the bill passed by the US Congress also includes a $1.4 trillion spending bill. Affected by this, market sentiment has been boosted, US stocks set new historical highs three times within a week, and the crude oil market has also been encouraged to continue to rise.
The OPEC+ meeting in January is still under dispute. At first, Russia insisted on increasing production by 500,000 barrels per day, but it was opposed by Middle Eastern countries led by Saudi Arabia. After the postponement of the fruitless dispute, on January 5, a compromise was reached between oil-producing countries. Most oil-producing countries kept production unchanged. Russia and Kazakhstan were allowed to increase production by 75,000 barrels per day in February, and further increase production by 75,000 barrels per day in March, while Saudi Arabia voluntarily reduced production by 1 million barrels per day in February and March. Barrels/day.
Before the meeting, the market generally expected OPEC+ to maintain its production level in January, waiting to observe the global epidemic situation before making further decisions. Saudi Arabia voluntarily cut production by 1 million barrels per day, far exceeding market expectations. After Saudi Arabia's production cuts, global crude oil supply will be further tightened from February to March. After the announcement, international oil prices broke through the previous fluctuation range and hit new highs.
Since the discovery of the mutation of the new coronavirus in the United Kingdom, South Africa, Canada, Japan, Spain, Switzerland, Sweden, and France have successively reported the emergence of mutated viruses. Moreover, compared with the previous new coronavirus, the mutant virus is more infectious. Affected by this, the number of new cases and deaths in a single day around the world have reached new highs. The worsening of the epidemic situation has once again caused investors to worry about the economic outlook, which once caused both U.S. stocks and crude oil prices to fall from high levels. However, due to the continuous advancement of vaccination work, and the mutated virus has not accelerated its spread across the world, market confidence has not been substantially damaged. However, the impact of the mutant virus is still continuing. The domestic epidemic situation in China has deteriorated recently, and the number of new infections in some areas has continued to increase. Therefore, many places have implemented fixed-point control. Before the epidemic has been effectively contained, the global economy and commodity demand will continue to be hit, which will remain the biggest potential negative.
Generally speaking, the current crude oil market is still in the contradiction of "strong expectations vs. weak reality". However, compared with the previous period, after Saudi Arabia cut production beyond expectations, the support of strong expectations has been further strengthened, especially in the second quarter that the supply and demand relationship will be tighter than expected. The weak reality is still reflected in the deterioration of the epidemic situation in Europe and the United States, and the terminal demand has weakened again. However, the current round of the aggravation of the epidemic has not yet fully spread, and the positive vaccine will continue to offset the negative impact of the epidemic. The problem of weak reality has not been magnified, and the overall support for oil prices by strong expectations still has to outweigh the suppression of weak reality.
Looking at the whole year, although the epidemic is still the biggest potential negative for the global market, crude oil prices are likely to have a high correction trend in the short term, but the expected space is limited. After the callback, crude oil is still expected to continue to rise.
