CCTV News quoted information from the security department of the Iraqi Kurdistan Autonomous Region (Korean Region) that Iran’s Islamic Revolutionary Guard Corps launched a “series of attacks” on Erbil, the capital of the Iraqi Kurdish Autonomous Region, in the early morning of the 16th local time, killing at least 4 people and 5 others. Injured, including local civilians. In addition, flights at Erbil Airport in the early morning of the 16th were suspended due to local attacks.
According to reports from the American Broadcasting Corporation (ABC), citing sources from the Iraqi security sector, on the 15th local time, multiple explosions occurred near the U.S. Consulate in Erbil, the capital of the Kurdish Autonomous Region in northern Iraq. According to reports, Iran’s Islamic Revolutionary Guard Corps took responsibility for the attack, saying it targeted “anti-Iranian terrorist gathering places” and “espionage agencies” in the region with missiles. According to reports, there were no US casualties in the attack on Erbil.
Last night, crude oil futures fell across the board, both internally and externally. At the opening of the night session, the main SC crude oil contract fell by more than 3%, and the main low-sulfur fuel oil (LU) and fuel contracts fell by nearly 2%. At the same time, WTI crude oil fell 2.00% during the day, and Brent crude oil fell 1.89%.
On the news, the Interfax news agency reported on Monday, citing sources, that the Russian government was considering a ban on gasoline exports following an accident at Lukoil’s Norsi refinery in Nizhny Novgorod. Industry sources said earlier on Monday that the refinery may cut high-octane gasoline production in half after an emergency shutdown of its catalytic cracking unit.
It is reported that Russia’s Lukoil stated in a statement on January 12 that an accident occurred in a technical device and operations were temporarily suspended. Lukoil is making every effort to resume operations at the Novgorod refinery.
After the news was announced, the decline in U.S. oil prices narrowed rapidly. As of morning’s close, Brent March crude oil futures closed down 0.18% at $78.15 per barrel. WTI crude oil had no closing price on Monday due to a public holiday and opened 0.4% higher this morning.
However, this morning TASS reported that the Russian government is not currently considering or discussing the possibility of banning gasoline exports.
Hengli Futures analyst He Han said that the center of gravity of crude oil prices will shift downward this year, and the annual average price of Brent crude oil will be in the range of 70-75 US dollars per barrel. Here’s why:
First, the impact of macro factors on crude oil this year tends to be neutral. In the process of normalizing the global economy, macro factors are difficult to provide upward support for crude oil prices, and good expectations for the future economy will offset part of the macro downward pressure caused by slowing economic growth. In addition, there is currently no clear evidence that Europe and the United States will fall into recession during this round of balance sheet reduction, and the macroeconomics will mainly have a neutral impact this year. However, if China’s economy develops beyond expectations this year, the macroeconomic impact will rise from neutral to driving.
Second, increased supply and insufficient demand will lead to a slight accumulation of crude oil storage next year. Taking into account OPEC’s production reduction discipline and the status of upstream oil and gas investment, crude oil supply is expected to increase by approximately 800,000 barrels per day this year. The supply variables are based on the actual increase in production in Brazil, Angola, Nigeria and Venezuela. On the demand side, crude oil demand growth this year is expected to slow to 1.2 million barrels per day, mainly due to the reduction in marginal incremental demand from China and India this year. “Based on the global supply and demand calculated by EIA in 2023, which totaled 101.62 million barrels/day and 101 million barrels/day, we judge that the crude oil market this year will accumulate storage slightly, but the extent of storage accumulation will decrease from last year’s 620,000 barrels/day. to 220,000 barrels per day.”
Third, the shortage of heavy oil will ease, but the balance between supply and demand will remain tight. The commissioning of the Trans Mountain Pipeline in Canada will increase the supply of heavy oil to the market by 300,000 barrels per day. Increased production in Venezuela, Guyana and Iran will also increase the supply of heavy oil. This will effectively alleviate the shortage of heavy oil supply caused by OPEC production cuts and increase the price gap between light and heavy oil. Return to the reasonable range. It is worth noting that most of the newly commissioned refineries in 2024 will use heavy oil as raw material, which means that despite the marginal increase in heavy oil supply, the balance between supply and demand will still be tight.
“In addition, the low diesel inventory situation will be alleviated, and the support of diesel cracking for crude oil prices will weaken. China’s jet fuel is expected to become the most eye-catching growth point this year. The current total number of international flights in China is about half of that before the epidemic, which Part of the demand for jet fuel is expected to return this year. In the long term, as supply-side expectations come to fruition and future macroeconomic growth slows down and demand weakens, the center of gravity of crude oil prices may gradually decline,” He Han said.
In terms of fundamentals, according to Zheng Mengqi, an energy and chemical researcher at Hizheng Futures, on the supply side, U.S. crude oil production remained unchanged at 13.2 million barrels per day as of the week of January 5. In its latest STEO forecast in January, EIA raised its forecast for US crude oil production growth in 2024 from 180,000 barrels/day to 290,000 barrels/day, and raised its forecast for US crude oil production in 2024 from 13.11 million barrels/day to 13.21 million barrels/day. barrel/day. Production will continue to grow over the next two years, driven by improved well efficiency, but at a slower pace as fewer rigs are active. Saudi Arabia cut the official selling price of Arabian Light crude oil sold to Asia in February by US$2/barrel to 2.The premium of Arabian light crude oil sold to Asia in this month is set at US$1.5/barrel to the average price of Oman/Dubai; the premium of Arabian light crude oil sold to northwest Europe is set to US$0.90/barrel to the average price of ICE Brent crude oil; Arabian Light crude oil sold to the United States is set at a premium of $5.15 per barrel to the price of Argus sour crude oil. The pricing cut was larger than expected, reinforcing signs of weakness in the spot market in the largest crude-consuming region. Due to the blockade by protesters, the Shalala Oilfield has experienced force majeure since January 7. Negotiations are ongoing and production will be resumed as soon as possible. As a result, Libyan oil production has slowed to 981,000 barrels per day. Currently, Libya’s ELFEEL oil field continues to produce. Iran has seized a tanker off Oman under a court order carrying 145,000 tons of oil loaded in Basra, Iraq, raising the possibility of further escalation in the Middle East. The hijacking of the ship in one of the largest attacks on a commercial route in the Red Sea by the Houthis has raised fears that shipping disruptions could spread elsewhere. Iran seizes oil tanker, geopolitical risks rise again.
On the demand side, gasoline, heating oil, and diesel oil cracked and consolidated externally. As of the week of January 5, U.S. refinery capacity utilization fell by 0.6 percentage points month-on-month to 92.9%. In its latest January STEO, EIA raised the global crude oil demand growth rate in 2024 from 1.34 million barrels/day to 1.39 million barrels/day, and raised the global crude oil demand forecast in 2024 by 120,000 barrels/day to 102.46 million barrels/day. . On the inventory side, U.S. commercial crude oil stocks increased slightly, strategic petroleum reserves increased, and gasoline and distillate stocks continued to accumulate significantly.
“On the macro level, although non-farm employment exceeded expectations and the unemployment rate was lower than expected in December last year, the number of non-farm employment in October and November was revised down at the same time, and the Fed’s interest rate cut expectations were postponed. In December last year, the U.S. CPI annual rate without seasonally adjustment was 3.4 %, a new high since September 2023; energy prices rose, with electricity and gasoline prices rising. Although the unseasonally adjusted gasoline price fell, the adjusted gasoline price rose, and expenditures on housing, electricity, and motor vehicle insurance increased. U.S. entertainment, new cars, education, air ticket prices and housing prices have all increased. Inflation has picked up, the possibility of an interest rate cut in March has decreased, and the certainty of an interest rate cut in May will also decrease. U.S. CPI data also suppressed interest rate cuts this year Expected. Overall, the crude oil market is intertwined with long and short positions, and crude oil prices are still treated with a wide range of oscillations. In terms of internal crude oil arbitrage, SC2402-2403, SC2403-2404, SC2404-2405, the main opportunities are wait and see.” Zheng Mengqi said.