Industrial Investment: Saudi Arabia lowers prices and plans to increase production, resulting in a sharp drop in oil prices on Monday20%

Industrial Investment: Saudi Arabia lowers prices and plans to increase production, resulting in a sharp drop in oil prices on Monday20%
2020year3month10day
International oil prices suffered a heavy drop on Monday, with a decline of over20%, creating1991The largest single day decline since the Gulf War in, due to Saudi Arabia'sOPEC+Announcement of official reduction after the breakdown of production reduction negotiationscrude oilPrice and plan to start from4Starting to increase production in the month, this has further exacerbated the supply-demand imbalance in the crude oil market, and the demand side has been impacted by the global outbreak of the coronavirus. In addition, the global stock market crash has intensified market panic and put pressure on risky assets such as crude oil. As of the close of trading in the United StatesWTIcrude oil4monthfuturesClosing down8.87USD, or21.31%Report32.76dollar/Bucket, highest reach34.84dollar/Bucket, lowest drop to27.32dollar/bucket;Brent crude oil5Monthly futures closed lower12.24USD, or26.87%Report33.32dollar/Bucket, highest touch in tray37.37dollar/Bucket, lowest drop to31.24dollar/Bucket.
Saudi Arabia and othersOPECMember countries have promoted daily production cuts150Ten thousand barrels to cope with the impact of virus demand, but Russia refuses to further reduce production. As retaliation, Saudi Arabia suddenly launched a global crude oil price war on Saturday. Saudi Arabia has significantly reduced the price of crude oil sold to foreign markets such as Europe, the Far East, and the United States, with discounts exceeding20The largest in recent years to attract foreign refineries to purchase Saudi crude oil. The statement shows:4Lowering the pricing of crude oil sold to Asia on a monthly basis4-6dollar/bucket;4Lowering the pricing of crude oil sold to the United States on a monthly basis7dollar/Bucket. It is worth noting that these are unprecedented discounts. Meanwhile, Saudi Arabia also stated that it will increase production if necessary,4Saudi Arabia's crude oil production may increase from approximately this month's97010000 barrels/Daily increase100010000 barrels/Day, even reaching120010000 barrels/The daily record level.
Russia has also stated that it will take corresponding measures in response to Saudi Arabia's actions. According to insiders familiar with the situation in Russia, Russian state-owned oil companiesRosneft PJSCPrepare to start from4Starting from the month, crude oil production will increase. This is the first clear response from the Russian side to Saudi Arabia's weekend actions. The report states that once4month1dayOPEC +The production restriction agreement has expired and ended,RosneftWe will prioritize shareholder interests and pursue our strategic goals. Moreover, the source also stated that,RosneftWe are ready to deal with any possible situation in the oil market. Meanwhile, Reuters reported on the official website of the Russian government that Russian Energy Minister Novak said, "The Russian oil industry has a high-quality resource base and sufficient financial strength, which can maintain competitiveness at any expected price level and maintain its market share."
Saudi Arabia is attempting to exert pressure on other oil producing countries, including Russia, by lowering crude oil prices, in order to force them back to the negotiating table and then work together to reduce production to boost oil prices. This may require Saudi Arabia to be more able to withstand the impact of low oil prices than Russia. However, the most likely outcome is that Russia will be able to tolerate low oil prices for much longer than Saudi Arabia. Chief Economist of Dutch International GroupDmitry DolginHe said, "Due to Russia's strict measures in the past few years, Russia can now afford lower oil prices than five to six years ago."
The crude oil price war launched by Saudi Arabia has intensified people's already widespread pessimism about the outbreak of the coronavirus, and this concern has intensified after the outbreak of new cases in Europe and the United States. Due to the surge in confirmed cases in Italy, Italian Prime Minister Conte announced that he will expand the blockade on the Lombardy region nationwide to control the outbreak of the virus. French Culture Minister Lester was confirmed to be infected with novel coronavirus. Canada has its first death from COVID-19. In addition, the United States has9Several states have declared a state of emergency. According to the latest report of WHO, COVID-19 is likely to become a pandemic.
In addition, investors were worried about the spread of the new coronavirus and the oil price war and sold off their stocks. US stocks fell sharply on Monday, hitting a circuit breaker mechanism during trading and suspending trading15Minute, ultimately the Dow Jones fell2013.7Point, received23851.02Point, with a drop of up to7.79%, creating2008year10month15The largest daily decline since the beginning of the day(7.87%)Standard&Poor's500Index decline7.6%, to2746.56Point, Nasdaq Composite Index Down7.29%, received at7950.68Point. US President Trump said on Monday that the drop in oil prices is beneficial to consumers, while he accused the media, Russia, and Saudi Arabia of arguing over oil prices and crude oil production as the reason for the significant drop in stock prices.
Meanwhile, the International Energy Agency(IEA)In the latest monthly report, it was pointed out that due to the outbreak of the coronavirus, the downward adjustment was made2020Annual crude oil demand growth forecast10010000 barrels/Oh my god, this is from2009For the first time since the beginning of the year, there has been a contraction.IEAestimate2020The annual oil demand is999010000 barrels/Oh my god, compared to2019Annual decrease910000 barrels/Heaven. Oil demand in the first quarter will decrease compared to the same period last year24910000 barrels/Heaven. Second quarter oil demand expected to decrease410000 barrels/Day, the third and fourth seasons have increased respectively135Ten thousand barrels and8010000 barrels/Heaven. In extreme cases where the government is unable to control the coronavirus,2020Annual demand may decrease7310000 barrels/Days.
Looking into the future, investors remain vigilant about the risks posed by the coronavirus to global economic growth and its impact on oil demand. The market focus is now shifting towards the monthly short-term energy outlook report from the US Energy Intelligence Agency and the American Petroleum Institute(API)Weekly crude oil inventory report. Crude oil inventory increased in the previous week16910000 barrels to4.47Billion barrels.
USD Index
The US dollar index continued to fluctuate and decline after falling short and opening low on Monday, briefly approaching95.00Psychological barrier, lowest drop to95.147This is2018year9month26At the lowest level since then, due to Saudi Arabia's crude oil price war and the spread of the coronavirus, market panic has risen, and investors have turned to safe assets. The United States10Period and30The yield of treasury bond bonds fell to a new historical low in, weakening the attractiveness of the US dollar. At the same time, the market is betting that the probability of further interest rate cuts by the Federal Reserve will increase significantly, which also puts pressure on the US dollar.
The Federal Reserve is one of the few central banks with ammunition. Although the Federal Reserve can continue to lower interest rates, the hope of preventing further interest rate declines is slim with the mild economic benefits of rate cuts. According to the Chicago Mercantile Exchange(CME)Federal Reserve observation(FedWatch)According to the tool, market participants currently expect the Federal Reserve to take action next week3Interest rate reduction at monthly meetings75The probability of a basis point is73%And interest rate cuts100Bps to0-0.25%The probability is as high as66.8%, previously expected to be41.1%。
technical analysis
American crude oil
Daily chart: Poly plus channel diffusion, oil price approaching downward trajectory;14and20Daily moving average bearish;Random indicators have risen from oversold areas.
4Hour chart: Poly Plus channel is declining, and oil prices are developing above the downward trend;14and20Bearish moving average;Random indicators have declined.
1Hourly chart: Poly plus channel convergence, oil prices approaching mid rail development;14and20Hourly moving average bullish;Random indicators withdraw from overbought areas.
Overview: It is expected that oil prices will decrease within the next few days31.00-34.85Within the range of fluctuations, one can try to sell high and buy low. Attention to resistance above34.00Psychological barrier, will be explored after breakthrough3month9Daily high point34.85And then2016year4month5Daily low point35.20and2016year4month5Daily high point36.75, and2016year4month17Daily low point37.60and2016year4month17Daily high point38.55;And the following supports attention3month10Daily low point32.05Falling below will lead to exploration31.00Psychological barriers, followed by2016year1month22Daily low point29.50and2016year1month15Daily low point29.10, and2016year1month18Daily low point28.20and3month9Daily low point27.30。
Brent crude oil
Daily chart: Poly plus channel diffusion, oil price approaching downward trajectory;14and20Daily moving average bearish;Random indicators have rebounded from oversold areas.
4Hour chart: Poly Plus channel is declining, and oil prices are developing above the downward trend;14and20Bearish moving average;Random indicators are rising.
1Hour chart: Poly plus channel convergence, oil prices developing above the mid rail;14and20Hourly moving average bullish;The random indicator continues to rise in the overbought area.
Overview: It is expected that oil prices will decrease within the next few days33.45-38.50Oscillation within the range can be attempted by throwing high and absorbing low. Attention to resistance above2016year2month26Daily high point37.00Breakthrough will be explored2016year4month4Daily low point37.50And then2016year4month1Daily low point38.50, and2016year4month8Daily low point39.60and2016year3month14Daily high point40.50;And the following supports attention36.00Psychological barrier, falling below will lead to further exploration2016year2month8Daily high point34.65And then3month10Daily low point33.45and2016year2month15Daily low point32.80, and2016year2month17Daily low point31.8and3month9Daily low point31.25。
Follow on Tuesday:
U.S.AEIAMonthly Oil Market Report
U.S.AAPIWeekly changes in crude oil inventory