[At the beginning of crude oil] oil prices rebounded slightly, waiting for the API inventory report guidelines

Huitong.com October 18th news - Tuesday (October 18th) crude oil at the beginning of the oil market, the oil price rebounded slightly. US oil traded around US$50.21/barrel, an increase of about 0.54%; oil oil traded around US$51.80/barrel, an increase of about 0.23%. Iran’s oil minister said on Monday that Iran is expected to achieve a production target of 5 million barrels per day, putting pressure on oil prices. However, the Russian Energy Minister once again stated that Russia supports OPEC frozen production, and the EIA report predicts a decline in US crude oil production, and the US dollar index temporarily fell, supporting oil prices to some extent. The market is cautious and waits for API stock reporting guidelines.



On Monday (October 17), WTI November crude oil futures fell 0.41 US dollars or 0.81%, falling below the 50 US dollar mark, to 49.94 US dollars / barrel. Brent December crude oil futures fell 0.43 US dollars or 0.83% to 51.52 US dollars / barrel. Iranian Oil Minister Zangane said on Monday that the new contract will allow Iran to achieve its target of 5 million barrels per day, which will increase market concerns about oversupply and make the OPEC production reduction agreement once again questioned by the market. The temporary fall in the US dollar index and the comments of Russian Energy Minister Novak support oil prices to some extent.


(The picture above shows the daily chart of the November contract price of US NYMEX crude oil futures)


(The picture above shows the daily chart of the December contract price of Brent crude oil futures)

Russian Energy Minister Novak said again on Monday that Russia still supports crude oil production. Reiterate that Saudi Arabia and Iran will be more flexible in the crude oil talks. Russia believes that the talks on crude oil show a positive trend. Russian domestic energy companies will participate in frozen production. Russia believes that the best crude oil production level is 6 million barrels.

Nigerian oil captain Kashiku said that he hopes to lift the force majeure of all oil fields before December. It plans to sign a $15 billion cash-for-oil agreement with India. Oil prices in the $60-70 range are beneficial to all parties. It is hoped that Nigeria will be allowed to produce 2.2 million barrels per day of oil under the OPEC framework. It is hoped that the price of oil will rise to the middle of 60-70 US dollars in 2017 and will rise to the middle of 50-60 US dollars in December this year.

Iranian oil minister Zanjane said that oil production should be decided in each country at the November meeting. Iranian oil production is already very close to pre-sanction levels. It is expected that the November OPEC meeting will reach a crude oil production agreement.

The Iranian vice president said that some neighboring countries such as Iraq have begun to boost oil production, and Iran cannot lag behind. Gasoline imports will soon end as new refineries will be commissioned in the coming months. Iran needs to regain its share of the crude oil market to get funding to support national development.

Research institute BMI said that although OPEC's major oil producers have agreed to cut production at the verbal level, OPEC's real implementation of production cuts faces multiple obstacles. Negotiations between the oil-producing countries on their respective market shares may trigger tensions within OPEC, and the growing disagreement between OPEC and non-OPEC oil-producing countries is also an important factor. Libya and Nigeria have gained immunity, crude oil production has increased rapidly, and the increase in crude oil production in the three major oil-producing countries, including Iran, Libya and Nigeria, is far greater than the reduction in crude oil production by other OPEC oil-producing countries.

From the fundamentals of supply and demand, Iran’s oil minister Zangane said on Monday that the new contract is expected to achieve a target of 5 million barrels per day. Iran plans to achieve an average daily output of 4.28 million barrels of crude oil and 1 million barrels of condensate in four years, and seek $200 billion in investment in its oil, gas and petrochemical industries to boost production and sales.

According to foreign media, Nigeria expects crude oil output to reach 2.2 million barrels per day by December. Nigeria's current crude oil output is 1.8 million barrels per day.

Iranian National Oil Company investment and financing general manager Kardor said that Iran plans to export 2.5 million barrels per day before March 2017.

According to the median forecast of eight analysts surveyed by Bloomberg, US crude oil inventories are expected to increase by 2.1 million barrels to 476.1 million barrels. The operating rate of refineries is expected to increase by 0.25% to 85.8%; gasoline stocks will be reduced by 1.125 million barrels to 224.4 million barrels; refined oil stocks will be reduced by 1.4 million barrels to 155.6 million barrels.

The EIA report predicts that total production in the US shale oil region will fall by 30,000 barrels per day to 442.9 barrels per day in November. October is expected to fall by 61,000 barrels per day. Crude oil production in the Permian Basin is expected to be 2.01 million barrels per day in November and 1.98 million barrels per day in October. Crude oil production in the Beacon area is expected to be 946,000 barrels per day in November and 967,000 barrels per day in October.

In addition, according to foreign media, Russia expects oil production to rise in 2017-2018.

From a geopolitical perspective, according to Bloomberg, Nigeria is expected to resume production in the Forados field that had previously been attacked within two weeks. Production in the Forcados field is expected to reach 2 million barrels per day in early November.

In terms of market linkage, Stanley Fischer, the Federal Reserve's vice chairman, issued a speech early Tuesday morning to warn of low interest rate risk and said that the Fed could not control all the factors that led to the drop in interest rates. After the Fisher speech, the dollar fell, and the dollar/yen hit a new low in the day. The decline in the US dollar index has supported oil prices to some extent. However, analysts pointed out that recent data indicates that the US job market continues to improve, and inflation is showing signs of recovery. The current trend of the US dollar index is only a short-term consolidation.

From the perspective of positions, the data released by the Intercontinental Exchange ICE showed that the net long position of Brent speculators in the week of October 11 was 396,694 lots, an increase of 37,995 lots.

According to market expectations, due to factors such as OPEC and Russian crude oil production remain high, global economic growth is weak and global crude oil inventories are high, Bernstein Research has lowered its 2017 Brent crude oil price forecast from US$70/barrel to 60%. USD/barrel. At the same time, the agency lowered its global crude oil demand forecast. The daily demand for crude oil in 2016 is expected to be 1 million barrels per day. The daily demand for crude oil in 2017 will be reduced from 1.4 million barrels per day to 1.3 million barrels per day. In this context, global crude oil inventories will increase significantly in 2017, and will not be apparent at the end of 2016.

Kuwait’s oil minister said that the current oil price is not sustainable. The Gulf Cooperation Council reported that the atmosphere of the Istanbul meeting was positive. Crude oil prices are expected to be in the range of $50-60/barrel in the next 10-15 months. I am optimistic that the OPEC meeting in November will reach a production consensus.

Credit Suisse expects oil prices to remain near $50/barrel this winter.

Indian private oil giant RIL expects oil prices to remain at $50-60/barrel in the near term. If the oil price drops to $45/barrel, it will not be surprising.

Russian Finance Minister Silouov said that the average oil price this year is expected to be $41/barrel.

Russia's largest pipeline manufacturer, TMK, expects oil prices to rise to the level of $55-60/barrel.

At 4:30 am Beijing time on Wednesday (October 19), the US API crude oil inventory report for the week of October 14 will be announced. Investors should pay close attention.

As of 10:25 Beijing time, WTI crude oil reported 50.21 US dollars / barrel; Brent crude oil reported 51.79 US dollars / barrel.