The hottest fuel oil will vibrate, and there is st

2022-10-22
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Fuel oil will fluctuate, and there is still support below the bottom.

Part I one week Market Review

in the past week, economic and financial factors continued to dominate the crude oil market. Dragged down by the debt problem of Ireland and the expectation that China may raise interest rates again, crude oil futures fell one after another after hitting a new high since October 2008 last Wednesday. Oil prices in New York fell below $80.50 on Wednesday. On the 18th (Thursday), Ireland's hopes of receiving financial assistance from the European Union and other institutions increased, calming investors' tension, and the euro rose sharply against the US dollar. In addition, economic data such as the number of initial jobless claims in the United States in the previous week were still ideal, and oil prices in New York stopped falling and rebounded. However, on Friday evening, after the announcement of the Central Bank of China raising the bank reserve ratio, the global market was panicked, and crude oil prices fell again

Shanghai fuel oil futures fell sharply this week, dragged down by the decline in crude oil. The main 1103 contract opened at 4870 this week and closed at 4764, with a cumulative decline of 150. The trading range is between, with a trading volume of 936058 and a position of 75780

Figure 1: trend chart of main contracts of crude oil and fuel oil

figure shows the trend chart of main contracts of crude oil and fuel oil. (image source: Bloomberg, mid-term Research)

Part II fundamentals and speculative factors of crude oil

first, concerns about China's tightening of money triggered a continuous decline in the market

China's CPI rose 4.4% in October, which was released on the 11th (last Friday). The market is worried that the people's Bank of China will take interest rate hikes or other measures to control the appearance of a car seat. The detection device that changes the spring performance is very important for its economic growth rate. Combined with the overall decline of European and American stock markets, the global commodity futures market suffered a heavy fall. WTI oil prices fell nearly $3 that day, and Brent crude oil also fell to $86/barrel

the Chinese government's statement that it is ready to take measures to control prices and the announcement again on the 19th that it will increase the bank reserve ratio by 0.50 percentage points to curb inflation and avoid overheating the economy fully shows China's determination to control inflation, which has dealt a heavy blow to the crude oil futures market

after China's CPI was released in October, the market unanimously expected that the Central Bank of China would raise interest rates twice this year to curb inflation. This week, the Chinese government's readiness to take measures to control prices and the move to restrict foreign investment in the domestic real estate market further dampened investors' enthusiasm for high-risk assets. At the same time, interest rate hikes or other tightening policies will inevitably curb China's economic growth by fixing another 10 prefix. China is the second largest energy consumer in the world and the main growth point of world crude oil demand. The impact of its economic slowdown on future crude oil demand cannot be ignored

second, the impact of the European debt crisis may decline

this week, the market experienced a bottoming out and recovery process around the impact of the Irish debt crisis. The uncertainty surrounding the Irish bailout has recently impacted the euro. Irish Finance Minister Brian Lenihan said on Thursday that Ireland will need some form of financial assistance from other EU countries. Officials from the European Union, the European Central Bank and the International Monetary Fund are currently studying the fiscal and banking system in Ireland

optimistic expectations for the rescue plan have driven the euro exchange rate up sharply for days. In fact, the negotiations may end with Ireland obtaining tens of billions of euros in loans. This event may not be as powerful as the Greek crisis in May this year

however, we should also see that in the process of economic recovery, crises from time to time are an important factor affecting people's confidence, and the recently established confidence in oil demand may be reduced

third, the heating season is coming, and the demand for crude oil is expected to increase

according to the latest inventory report of the U.S. energy information administration, U.S. crude oil inventories unexpectedly decreased by 7.29 million barrels in the week ended November 12, the largest weekly decline in 15 months. This is mainly due to the reduction of imported crude oil in the Gulf of Mexico. Meanwhile, gasoline inventories in the United States decreased by 2.66 million barrels, and distillate oil inventories, including heating oil and diesel oil, decreased by 1.11 million barrels. The total inventory of commercial oil products in the United States maintained a downward trend week by week. However, another agency data showed that the crude oil inventory of NYMEX crude oil delivery site Cushing has increased for three consecutive weeks

on the other hand, the retail statistics of gas stations show that the average daily demand for retail gasoline in the United States increased by 2.4% in the week of November 12 compared with the previous week, but the test of full-automatic spring testing machine dedicated to spring tension and compression still fell by 0.2% year-on-year. In addition, according to the weather report, low-temperature weather below the annual average will occur in all parts of the United States next week, and the winter heating demand that has been supporting the market mentality may change from expectation to reality in the near future

judging from the statement of relevant OPEC officials that its quality will be better and better, it is expected that the OPEC meeting on December 11 will not adjust the current production policy. According to media statistics, the fulfillment rate of production reduction of OPEC member states in October decreased by 3 percentage points to 54% compared with that in September. The global oversupply of crude oil will continue

Figure 2: US crude oil commercial inventory and year-on-year growth rate

the figure shows the trend of US crude oil commercial inventory and year-on-year growth rate. (image source: EIA, interim Research)

Figure 3: gasoline inventory and year-on-year growth rate in the United States

the figure shows the trend of gasoline inventory and year-on-year growth rate in the United States. (image source: EIA, mid-term Research)

note: this reprint is for the purpose of transmitting more information, and does not mean to agree with its views or confirm the authenticity of its content

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