U.S. WTI April crude oil futures electronic disk closed Monday (March 4) up $0.65, or 1.16%, to $56.45 a barrel. U.S. oil rose more than 1% on Monday as the United States and China appeared close to ending a trade dispute that has dragged down global economic growth, while Russia, an ally of the Organization of Petroleum Exporting Countries (OPEC), said it would step up production cuts.

Meanwhile, ICE Brent crude oil futures electronic disk closed up $0.53, or 0.81%, at $65.60 a barrel in May.

Optimistic Prospects of Sino-US Trade Negotiations Boost Oil Prices

A source who listened to the briefing on the talks said Sunday that China and the United States seemed close to reaching an agreement and that the U.S. tariffs on at least $200 billion of Chinese goods were expected to be withdrawn.

Bob Yawger, head of Mizuho Energy Futures, said the bottom line was optimism about the trade situation. Russian Oil Minister Nowak’s remarks that he would reach a cut-off level by the end of March also helped boost the market.

The news that Russia plans to increase its output cuts is good for oil prices

Russia’s energy minister, Nowak, said the country planned to accelerate crude oil production cuts this month. Russia is OPEC’s largest non-member country ally.

OPEC sources said that OPEC and its allies, the so-called OPEC+, might decide on a new production policy in June rather than at the Vienna Conference in April.

The source said that OPEC + is expected to extend the production reduction plan at the June meeting, but mainly depends on the extent of sanctions imposed by the United States on OPEC member states Iran and Venezuela.

The survey showed that OPEC crude oil supply fell to a four-year low in February, as Saudi Arabia, the main exporter, cut production more than it had previously promised, and the U.S. oil sanctions against Venezuela came into effect. The survey is one of several estimates of OPEC’s official production data before it is released. OPEC’s data will be published in the monthly report next week.

OPEC’s decision to cut production has boosted oil prices by more than 20% this year.

US crude oil production shows signs of slowing down

In the United States, there are signs that oil production boom may slow down in the past few years. U.S. energy companies last week cut the number of oil rigs looking for new reserves to the lowest level in nearly nine months, and some oil producers are also implementing spending cuts.

The first U.S. energy unit data for November showed that U.S. oil production fell in December after soaring in November, but still higher than previously predicted.

In the week ending February 26, hedge funds and other fund managers increased Brent’s net long position by 15887 to 291 336.

Dutch International Group said that although the main reason for the rise in the market is short covering, in recent weeks, we have seen new bulls returning to the market, indicating that market sentiment is becoming more positive.

But demand pressures may limit further increases in oil prices. Bjarne Schieldrop, chief commodity analyst at SEB Bank, said refineries were now undergoing repairs, which meant a reduction in crude oil supply and weak spot crude oil prices.

Although a large number of tens of millions of tons of petrochemical enterprises such as Yunnan Petrochemical Company, Hengli Petrochemical Company and Zhejiang Petrochemical Company have been put into operation one after another, the market competition of petrochemical products may become white-hot. However, due to the accelerated growth of energy consumption, better import and export than expected, and the continuous optimization and upgrading of economic structure, the petrochemical industry has shown a trend of rapid growth in efficiency and a rebound in investment. Although the future of petrochemical industry is full of dangers, the investment in chemical raw materials and chemicals industry is turning from negative to positive by 6.0% in 2018, benefiting from the rebound of main profits and the strength of profit focus terminal. A few days ago, Fu Xiangsheng, vice president of China Petroleum and Chemical Industry Federation, introduced at the economic operation conference of the petrochemical industry in 2019 that the petrochemical industry is getting better and has a promising future.

Zhu Fang, Director of Information and Market Department of the Federation of Petrochemical Industry, pointed out that in recent years, China’s petroleum and chemical market fluctuated greatly and differentiated greatly, but overall, it was still better, prices kept rising, supply and demand growth structure improved, industry efficiency innovated high. In 2018, market demand increased steadily, main profits rebounded, profit focus terminal power and Industry investment rebounded. However, the current economic operation of the industry is still facing problems and challenges such as complex external environment, severe market shocks, weak demand growth and insufficient investment motivation. The report points out that in 2019, the world economy is still facing great uncertainty, downward pressure is high, and growth may slow down. China’s petroleum and chemical markets are facing greater challenges. Especially in the first half of this year, the contradiction between supply and demand in some markets has intensified, and prices may be low and volatile. It is estimated that the total price level of oil and gas exploitation industry will decrease by about 10% and that of chemical industry by about 3%.

There are changes in stability and worries about “double growth” in change.

In 2018, the petrochemical industry has achieved a “double growth” of its main revenue and total profits, and the overall situation continues to be stable and positive. However, there are still some worries about the healthy and sustainable development of the whole industry in the future through in-depth and detailed analysis.

In addition to the increasing downward pressure, the market competition is becoming increasingly fierce. Influenced by the continuous rise in petrochemical product prices in the past two years (8% increase in oil and gas prices in 2017, 3.5% increase in chemical products, 26.3% increase in oil and gas in 2018, and 6.8% increase in chemical products over the same period last year), petrochemical production capacity has been continuously increasing, such as the integrated refining unit. After the launch of PetroChina Yunnan Petrochemical Corporation (13 million tons/year) and CNOOC Huizhou Phase II (10 million tons/year), Dalian Hengli 1 Phase I (20 million tons/year) will be put into production on December 15, 2018, and Phase I (20 million tons/year) of Zhejiang Petrochemical Company will be put into operation in the first half of this year. These new integrated refining and petrochemical plants have been put into operation one after another, and their products with high external dependence on olefins and aromatics can partly meet the domestic market; however, the domestic product oil market has become saturated, especially the annual apparent consumption of diesel oil has dropped by another 3.3%. Another factor that will become more intense in the domestic market competition is that the crude oil refining industry has achieved a target of 200 million tons in 2019, and the product mix of local refining units has been achieved. The structure is mainly refined oil. There are also some impulses to expand the production of traditional basic chemicals, and some new materials such as PC are under construction and planned to be built on an amazing scale.

Overall, safety in production, strict environmental protection, trade frictions, crude oil prices, green development, supply reform and other external factors highlight the shortcomings of the industry, shortage of energy resources, low-end homogeneity of products, insufficient investment in environmental protection, and adjustment of production capacity structure, all become concerns affecting the development of the industry. It is worth noting that the chemical industry sector, which has been regarded as the direction of future transformation of the industry, is more worried. The price of chemical products fluctuates greatly. When the price of chemical products went downward in November last year, it became more evident. With the decrease of the main business income of the chemical sector, the number of regulated enterprises and their benefits changed more. The number of regulated enterprises decreased by 1381. The total profit decreased by 104.4 billion yuan compared with the previous year. The growth rate of profits decreased from 40.2% in the previous year to 16.3%, and the proportion of total profits in the whole industry decreased by 71.5% from the previous year. To 60%. After the fourth quarter of last year, investment in chemical raw materials and chemicals manufacturing industry resumed growth trend, but in 2018, the annual growth rate was only 6.0%, still below the average growth rate of 6.5% of the national industrial investment.

Although the petrochemical industry is also facing many uncertainties, such as Sino-US economic and trade friction, downward pressure of global economy, fluctuation of international crude oil prices, etc., Zhejiang Petrochemical Company is still in the second phase and planning three phases of projects. First-class multinational companies such as Basf and ExxonMobil have increased their investment in China, especially these companies have taken part in the chemical industry in depth in the face of the adverse situation of the large southern projects with sole technological ownership. Business, the intense competition of chemical products market in the future can be seen.

Pillar role of petrochemical industry highlights the role of key enterprises as stabilizer ballast

Petrochemical industry, as the pillar industry of national economy, not only plays an important role in high-yield and high-yield agriculture, but also provides an important guarantee for high-end manufacturing and strategic emerging industries such as automobile, high-speed railway, information energy, aerospace, defense and military industry. It also makes an important contribution to the steady growth of national economy. In 2018, the proportion of the total industrial economy has been raised again, and the main business income was from the previous year. 11.8% increased to 12.1%, and the total profit increased to 12.7% from 11.3% in the previous year. The status and importance of the petrochemical industry are more prominent. At the economic operation analysis meeting of the six major enterprise groups held at the end of last year, six major groups, such as PetroChina, Sinopec, CNOOC and Sinochem, had good production, marketing and economic operation of their main products in 2018. Crude oil and natural gas production accounted for almost 100%, crude oil processing volume accounted for about 80%, main business income accounted for about 60% of the whole industry, and total profit accounted for about 40% of the whole industry. In recent years, they have been large-scale. By building world-class enterprises with global competitiveness and pushing forward the structural reform of supply side, the leading industries of backbone enterprise groups have become more prominent and their core competitiveness has been strengthened. The role of stabilizer and ballast stone in the development of the industry has become more and more obvious. A number of innovative enterprises such as Yantai Wanhua, Jin Zhengda, Huafeng and Fuhua have strong industry leading role and leading products. The global competitiveness is becoming stronger and stronger; Rongsheng, Hengli, Shenghong and other enterprises with strong market competitiveness are marching into the petrochemical field with brand-new mechanism and rich experience accumulated through years of market struggle, and will make important contributions to the scale effect of China’s petrochemical industry, the extension of industrial chain and the promotion of overall competitiveness. Especially after the recent private economy symposium, the policy effects of tax reduction and fee reduction will appear this year. The vitality and development potential of private economy will be released centrally, which will inject new vitality into the high-quality development of petrochemical industry.

The optimization and upgrading of petrochemical industry structure and the new technology have great potential to stir up the market

The structural contradiction of “excess capacity at low end and insufficient supply at high end” in the petrochemical industry has not been fundamentally reversed. New chemical materials such as high-end polyolefins, special resins, special engineering plastics, high-end membrane materials, special chemicals such as functional materials, medical chemical materials, high-end electronic chemicals and some special chemicals such as catalysts and special additives (additives) used in the petrochemical process have not yet been fundamentally reversed. The domestic market has been in a state of insufficient supply for a long time, and some even rely heavily on imports. These are the realistic market demand for the transformation and upgrading of the petrochemical industry and structural optimization, and also the opportunities for the future high-quality development of the petrochemical industry.

The Central Committee of the Party and the State Council attach great importance to the high-quality development of the petrochemical industry. General Secretary Xi Jinping has inspected Qinghai Salt Lake, Ningxia Coal-to-Oil, Daqing Petrochemical, Hubei Xingfa, Yantai Wanhua and Liaoyang Petrochemical in recent years. Premier Li Keqiang emphasized in the State Council executive meeting that the petrochemical industry is an important pillar industry of the national economy, aiming at the current lagging development of high-end petrochemical industry. Some products rely too much on imports and other prominent problems. We should strengthen overall planning, scientific demonstration and rational layout, promote the transformation and upgrading of the petrochemical industry, and enhance domestic security capacity. Basf, ExxonMobil and other multinational companies continue to increase their investment in China, which proves the importance of Sinopec market and promising future development opportunities.

Under the background of tens of millions of tons of large-scale projects being put into production intensively and the transportation field seeking to replace oil, how to solve the problem of excess oil production capacity? Fu Xiangsheng told reporters that Exxon Mobil’s exploration of direct olefin production technology from crude oil without gasoline and diesel oil has been established in Southeast Asia, although on a small scale, but may soon be transferred to China’s solely-owned Guangdong project. From this point of view, in the future, innovation and breakthroughs driven by the impact of some key factors from inside and outside may lead to a change in the world petrochemical industry. Especially under the guidance of some subversive new technologies, a technological change in the field of petrochemical process may be coming that leaps over refining to chemical industry. At that time, the Chinese market will dominate half of the global petrochemical market.

Russian energy minister Alexander Nowak described Russia’s oil and gas reserves in an interview with Russian media.

Russia’s energy minister pointed out that there are a large number of proven oil and gas reserves in the world. The main problem facing countries and oil companies at present is how fast to monetize these reserves. Many countries in the world have oil and gas reserves of more than 10 years, 15 years, 20 years or even higher.

According to current production calculations, Russia has more than 100 years of natural gas reserves. Up to now, Russia’s oil reserves (Class B and Class C) have reached 29 billion tons. Of course, there are two kinds of oil reserves: commercial exploitation and commercial non-exploitation.

Russian Energy Minister Nowak pointed out that commercial exploitation depends on the financial system for the oil industry. Nowak added that under the current financial system, about 50 percent, or 15 billion tons, could be exploited commercially. Russia’s oil production in 2018 was 556 million tons, which corresponded to a simple division of about 30 years, which was only commercially recoverable reserves.

PetroChina announced on February 28 that the Guandong area of Dagang Oilfield of PetroChina has formed a battlefield for increasing reserves of shale oil of 100 million tons. By the end of 2019, a new production capacity of 110,000 tons and an annual output of 50,000 tons will be built, which marks that PetroChina has taken the lead in industrializing the development of Continental shale oil in the Bohai Bay Basin and is of great significance for guaranteeing national energy security and economic development.

Shale oil refers to the petroleum resources contained in shale series dominated by shale. These include oil in shale pore and fracture, and oil resources in dense carbonate or clastic rock adjacent layers and interbeds in shale series.

From the international point of view, marine shale oil is mainly developed in foreign countries. After nearly 10 years of exploration, commercial development of marine shale oil in the United States has exceeded conventional oil, which has an important impact on the world’s political and economic pattern. Continental shale oil is mainly developed in China. At present, exploration and development has just started, and there is no successful experience to draw lessons from.

According to IEA International Energy Agency, China is rich in shale oil resources, with recoverable resources of about 4.5 billion tons, second only to Russia and the United States, ranking third in the world, and is an important strategic alternative resource in the future. In recent years, PetroChina has conducted pilot tests in Bohai Bay Basin, Songliao Basin, Ordos Basin, Junggar Basin and other large sedimentary basins, increased investment in risk exploration, listed shale oil as one of the four major exploration areas, and listed Dagang Oilfield, Xinjiang Oilfield, Tuha Oilfield and Changqing Oilfield as important demonstration areas for shale oil development.

In 2013, Dagang Oilfield acquired shale oil flow in Bohai Bay. After that, we continued to accelerate the pace of shale oil exploration, cracked the restricted area of conventional oil exploration concepts through concept innovation, successfully positioned the main battlefield of continental shale oil exploration and development. Two horizontal shale oil wells, Guandong 1701H and Guandong 1702H, produced steadily for more than 260 days and accumulated thousands of square meters, thus realizing the industrialized development of continental shale oil, which not only made up for the academic research of continental shale oil at home and abroad. The gaps in this field have promoted the further enrichment and perfection of the discipline system, and also realized the rapid development of key technologies and supporting technologies for exploration and development of continental shale oil.

PetroChina has intensified shale oil exploration and development in Bohai Bay, Ordos and Junggar Basins. We will strive to make the exploration and development of shale oil in Dagang Oilfield a national demonstration project. The first step is to implement reserves and consolidate the foundation. By the end of 2019, new capacity of 110,000 tons and annual oil production of 50,000 tons will be built, which will lay a solid foundation for building demonstration zones. The second step is to establish standards and build demonstrations. By 2022, a demonstration area for exploration and development of continental shale oil in China will be built to drive the exploration and development of shale oil in the eastern part of China. The third step is to scale up production and lead development. By 2025, the total reserves will be increased by 300 million tons, the new production capacity will be 1 million tons, and the annual oil production will be 500,000 tons. A set of effective development methods will be innovated to provide experience for China’s shale oil revolution and guide the development of China’s petroleum continental shale oil.

China is the second largest oil consumer in the world. In 2018, crude oil dependence exceeded 70%. Zhao Xianzheng, general manager of Dagang Oilfield, said that the breakthrough in shale oil exploration and development in Dagang Oilfield opened the door to shale oil underground treasures, opened a new way for high-quality sustainable development of old oilfields, accelerated the pace of industrialized development of shale oil in China, and is expected to become an important strategic support for ensuring national energy security.

Since the fourth quarter of last year, terminal demand has entered the off-season. Many domestic coal-based olefin enterprises have stopped for maintenance. The demand for methanol, especially in eastern China, has shrunk sharply. In this case, the supply and demand pattern of methanol market is unbalanced, and methanol prices tend to be weak after the Spring Festival.

Supply pressure released

In terms of domestic supply, according to data released by Longzhong Information, the methanol plant overhauled before the Lantern Festival will usher in a peak of re-production, which will reach 7.19 million tons from mid-late February to early March. From late March to April, 2.75 million tons of methanol plants will be re-produced one after another in China. However, after the end of March, the domestic methanol market will be overhauled in spring, when some domestic methanol enterprises will carry out overhaul, which will eliminate the impact of methanol production in late March on domestic methanol production. Therefore, in this case, after the peak of methanol production at the end of this month, the market supply pressure will basically be released.

On the import side, as several methanol plants in Southeast Asia reduce their load, the international methanol supply shows a slight decline, and the domestic methanol price has risen from the bottom. In fact, from the current situation, the arbitrage space of methanol import is gradually narrowing, which will have a certain inhibitory effect on methanol import.

In terms of inventory, the high inventory is an important reason to restrict the continuous rise of methanol price. As of February 21, methanol port stocks in eastern and southern China were 836,000 tons, up 357,200 tons from the same period last year, with an increase of 74.60%, the highest since 2014. Among them, the inventory of methanol ports in East China was 607,500 tons, up by 234,500 tons compared with the end of last year, up by 62.87%; the inventory of methanol ports in South China was 228,500 tons, up by 12.27 tons, up by 115.97% compared with the end of last year. However, recent market participants reported that due to the change of market mentality, the willingness of traders and enterprises in East China to take goods increased significantly, which helped to alleviate the high methanol inventory in the southeastern coastal areas.

Expectations of a warming demand increase

After the Spring Festival, downstream demand for methanol has recovered, which forms a certain support for methanol prices. In terms of traditional demand, traditional downstream enterprises of methanol have resumed production after the Spring Festival. According to the data published at present, besides formaldehyde, the start-up load of acetic acid, dimethyl ether, MTBE, DMF and other enterprises has shown a steady and rising situation, and the market demand for methanol has warmed up. In terms of emerging demand, due to the obvious repairs of the profits from methanol extraction to olefins and the entry of terminal film into the peak consumption season, many domestic coal-based olefin plants which had been repaired earlier have recently resumed production. At present, coal-based olefins account for nearly half of domestic methanol consumption, so the warming of coal-based olefins will play a strong role in stimulating domestic methanol demand, especially in eastern China.

In summary, although domestic methanol enterprises concentrated on re-production, high inventory, the overall supply pressure is still great, but from the current situation, the supply side of the shortfall has basically been realized, do not have the conditions for further deterioration. On the other hand, in the spring, the downstream consumption of methanol began to pick up gradually. In this case, the overall supply and demand pattern of methanol will gradually transform, the excess supply will gradually ease, and the price focus of methanol is expected to gradually rise. Based on the above judgment, we believe that the current methanol has a certain long-term value, which can be established in the medium and long term after the price exceeds 2600 yuan/ton.

Since 2019, Ethylene glycol futures have maintained low adjustment after stabilization, and are now consolidated at 5150 yuan per ton. Industry insiders pointed out that the recent recovery of the crude oil market has brought support to the entire chemical market, but the glycol futures price is limited by its weak fundamentals and insufficient willingness to follow up. Future price rebound mainly depends on the inventory level, which takes some time.

Insufficient willingness to follow price increases

In the spot market, the price of ethylene glycol in East China remained volatile last week, with weak market turnover and low interest in downstream purchases.

From the upstream crude oil market, since 2019, the overall performance of the crude oil market is strong, but recent data show that U.S. crude oil production reached a record high, and inventories rose for five consecutive weeks, so last week there was a slight decline.

Fundamentally, the data provided by Founder medium-term futures show that the current ethylene glycol load is 80.59%, of which the coal chemical load is 72.8%, and the current polyester load is 79.71% in demand, and the polyester gradually resumes operation.

In terms of inventory, the latest data from Jin Lianchuang show that the total inventory of ethylene glycol in East China on February 21 is 109.2 million tons, an increase of 26,000 tons compared with February 14. Among them, Zhangjiagang is 804,000 tons, Taicang is 117,000 tons, Ningbo is 76,000 tons, Jiangyin is 41,000 tons and Yangshan is 54,000 tons. Inventories in major ports continue to accumulate around the Spring Festival and have reached a new high in recent years.

“Persistent high inventory pressure and high start-up load of domestic ethylene glycol plant make the short-term factor of supply side continue to ferment in the near future. Therefore, ethylene glycol futures have become short-term targets for chemical products. Some hedging operations are in the form of short-term ethylene glycol futures, which makes the price of ethylene glycol insufficiently willing to follow up when chemical products rise, but become the fastest-falling production when they fall. Product. ” Gao Shihong, a chemical analyst at Jinlianchuang, told China Securities News.

Xinda futures analysts Xu Lin and Han Bingbing said that the stock pressure in the ethylene glycol market is high, and the absolute volume is at a historical high. Under the pressure of high inventory, the profit of the ethylene glycol industry has been poor for about two months. Four sets of equipment involving 1.3 million tons in Jiangsu and Zhejiang are planned to reduce the load or stop, which may support the price of ethylene glycol in a short time. We need to pay attention to the specific situation of the later operation of the equipment.

It takes a long time to get out of stock.

Generally speaking, Liang Jiakun, a futures analyst at Fangzheng Medium Term, said that due to oversupply, stock accumulation, polyester load increased slowly, downstream demand was flat, and supply-demand pressure remained high. However, considering that some of the process cash flow of ethylene glycol is negative, there is limited room for prices to continue to fall, and low oscillation is expected to dominate in the short term.

“Recently, international crude oil continues to rise, ethylene and naphtha upstream raw materials of ethylene glycol have increased significantly, while ethylene glycol does the opposite and does not rise and fall, resulting in a variety of process ethylene glycol factories facing greater cost pressures. The increase in the price of ethylene glycol seems to be expected to be due to a reduction in the premium at the ethylene glycol plant, but there is no sign of that yet. Gao Shihong’s analysis.

Gao Shihong believes that even if there is a negative price reduction in the glycol plant, it will take some time for the effect to appear. Therefore, if the glycol market wants to get rid of the current predicament, it mainly hopes that downstream demand will turn around. With the improvement of demand in polyester factories, the market mentality gradually recovers after ethylene glycol enters the de-inventory stage. With the relatively low price, the price of ethylene glycol may have a wave of market, but from the current situation, it still takes a long time to enter the de-inventory cycle.

The International Energy Agency (IEA) released the Global Coal Market Report (2018-2023) in Beijing on May 25. According to the report, China’s coal demand has entered a slow downward trend, and the average annual coal consumption will decline at a structural rate of less than 1%.

Coal is still the core of the global energy system, the report said. Because of the advantages of affordable price, abundant reserves and easy transportation, coal is still the main energy source in many countries. Especially in China, South Asia and Southeast Asia, coal also provides energy security and energy popularization functions, and supports local economic development.

The report predicts that global coal demand will remain stable in the next five years. Coal consumption in Europe and the United States will decline, but the decline will be offset by growth in India and other Asian countries. The contribution of coal to the global energy structure will decrease from 27% to 25%, mainly from renewable energy and natural gas.

According to the report, 1 ton of every 4 tons of coal in the world is used for power generation in China. Therefore, the fate of coal largely depends on China’s power sector.

Liu Baohua, deputy director of the State Energy Administration, said at the meeting that 70% of China’s coal-fired power units have achieved ultra-low emissions. China has built the largest clean coal-fired power supply system in the world, effectively alleviating the contradiction between energy supply and environmental protection, and demonstrating the clean use of coal worldwide.

The conference was jointly organized by the International Energy Agency and the National Energy Group and sponsored by China Shenhua Energy Co., Ltd.

Following the consecutive surge, the crude oil market has recently recovered, with the main domestic crude oil futures contracts falling by 4.73% on February 26. The sharp drop in oil prices also dragged down futures prices of fuel oil, asphalt and PTA. Analysts said that the comments made by President Trump on oil prices and Russia’s weak capacity to cut production were all a drag on the trend of oil prices. It is expected that the short-term oil price will maintain the trend of recovery, but the medium and long-term is still expected to oscillate upward.

Crude oil futures plummeted

Domestic crude oil futures fell sharply on the 26th, with the main 1904 contract closing at 427.5 yuan/barrel, a new low since February 12, closing at 433.1 yuan/barrel, down 4.73%. Fuel oil futures fell sharply with the main 1905 contract closing at 2808 yuan/ton, down 3.7%. Asphalt futures main 1906 contract closing at 3210 yuan/ton, down 1.17%. PTA futures main 1905 contract closing at 6406 yuan/ton, down 1.11%.

Li Lei, a chemical researcher at Meyer Futures, said that on the evening of the 25th, US President Trump issued a tweet calling for OPEC to ease production cuts. Affected by this, crude oil futures prices fell sharply, and fuel oil, asphalt and other futures varieties also fell to varying degrees. Tian Yujia, a chemical analyst at Dongwu Futures, added that Russia’s weak capacity to reduce production also poses a drag on the crude oil market.

From a deeper point of view, Li Lei believes that “Trump’s statement is only the cause of the lower oil price, and the two factors of the increase of U.S. commercial crude oil stocks for five consecutive weeks and the weakening of the monthly difference in crude oil contracts are the internal causes of the change of oil prices from rising to falling.”

Short-term fear of continued callback

“The future crude oil market fundamentals will be dominated by three factors: OPEC production reduction, U.S. shale oil production increase and weak demand.” Li Lei said that OPEC maintained a high level of production reduction, combined with instability in Libya and Venezuela, and the first half of OPEC production reduction will provide support for oil prices. Although shale oil production in the United States has maintained a low growth rate recently due to pipeline constraints, it is expected to accelerate in the second half of the year as pipelines are gradually put into operation, which will have an impact on the crude oil market. In addition, the slowdown of global economic growth may also affect the prospects of crude oil demand. Some institutions have lowered their expectations of crude oil demand growth in 2019, putting long-term pressure on the oil market.

Tian Yuejia said that due to the rapid growth of shale oil production, the production of light oil soared, and the current U.S. gasoline inventory is at the top of the historical range, the U.S. crude oil market focuses on the process of product oil de inventory. Brent crude oil market needs to pay attention to the reduction of Saudi Arabia and Russia. If Saudi Arabia maintains low production, the crude oil supply will have a gap when the peak consumption season comes.

For the future market, Tian Yujia said that the short-term crude oil prices will maintain a pullback trend. However, in the medium and long term, the contradiction between supply and demand of light and heavy oil may be difficult to solve, and crude oil can still be used as a multi-head configuration.

Li Lei also said that although OPEC production cuts provide power for oil prices to rise, because of weakening expectations on demand side and increasing production of shale oil in the United States, production cuts have not been smoothly transmitted to the inventory side, so the U.S. commercial crude oil stocks have increased for five consecutive weeks, and it is expected that short-term oil prices will maintain a retracement trend, but the long-term upward trend is still expected to remain volatile. In terms of operation, under the background of short-term weakness of crude oil, chemical futures, such as asphalt and PTA futures, which have high correlation with oil prices and weak fundamentals, will face downward pressure and can be short-term allocation.

According to the latest data released by the General Administration of Customs, in January 2019, China imported 12.33 million tons of power coal (including bituminous coal and sub-bituminous coal, but not lignite, the same below), an increase of 570,000 tons, an increase of 4.85%, an increase of 8.33 million tons annually, an increase of 208.25%.

Imports in January 2019 amounted to $933,341,000. As a result, the unit price of imports was $75.7 per ton, an increase of $11.53 per ton from the previous year, an increase of $2.65 per ton from the previous year.

In January 2019, China imported 12.85 million tons of lignite, an increase of 2.65 million tons, an increase of 25.98%, and an increase of 10.1 million tons annually, an increase of 367.27%. Imports amounted to $546.153 million, an increase of 2.3% over the same period last year.

According to Reuters in Singapore, Asia’s largest oil consumers are exporting large quantities of refined oil to the region, as refining output exceeds consumption in the context of slowing demand growth, putting pressure on industry profits.

Since 2006, the Asia-Pacific region has been the largest oil consumer in the world, driven by the traditional industrial consumer countries Korea and Japan, as well as the rising economic powers China and India. However, the over-construction of refineries and the slow growth of demand have led to a substantial increase in the export of refined oil products from these demand centers.

The surge in refined oil exports, coupled with a 25% surge in crude oil prices so far this year, has reduced the profit margin of the Asian benchmark Singaporean refinery from more than $11 a barrel in mid-2017 to just over $2 a barrel at present.