WTI crude oil prices rose to US$70/barrel
The US WTI crude oil futures rose sharply to US$70.84/barrel, which was the first time that WTI reached US$70/bbl after 2014; and the Brent crude oil futures price in the UK also hit US$76.34/bbl.
Long Yan Information analyst Li Yan said that geopolitics has continued to fluctuate. Israel has accused Iran of secretly studying nuclear weapons and Iran’s refusal to add options to existing nuclear issue clauses, which has increased market concerns over US-Iranian relations.
Although U.S. President Trump has not yet announced whether to withdraw from the Iranian nuclear agreement in 2015, U.S. officials have already demonstrated their negotiating posture after exiting the agreement. Iran’s leaders have made it clear that they will not accept the new terms, so the sharp rise in international oil prices is also Reasonable.
However, many senior executives in the refining industry frankly stated that as China's crude oil imports continue to increase, its dependence on crude oil will inevitably reach over 70%. Once Saudi Arabia’s production cuts continue to be implemented, international oil prices may continue to rise.
On May 4, Li Xiangping, chairman and president of the Board of Shandong Dongming Petrochemical Group, stated in Shanghai that China's crude oil production has been lacking in productivity, and the main oil field continued to reduce production. According to the production plan, in 2017, Shengli Oilfield will produce 23.4 million tons of crude oil in the oil field, which will continue to reduce production by more than 500,000 tons compared to 2016; Daqing Oilfield plans to reduce crude oil production to 32 million tons by 2020, with an annual reduction of approximately 1.14 million tons. However, China’s crude oil imports are still rising.
On May 8, the General Administration of Customs stated that China’s crude oil imports reached 9.64 million barrels per day in April, up 8.9% year-on-year, setting a record high of 9.61 million barrels per day in January.
As of press release, WTI crude oil futures price was 69.91 US dollars / barrel, Brent crude oil futures price was 75.52 US dollars / barrel.
International oil prices rose to US$70/barrel
Many experts believe that the outcome of the United States’ withdrawal from the Iranian nuclear agreement is about to come to an end, and rising market concerns are the reason for the current rise in international oil prices.
It is understood that since the international community suspended Iran’s economic sanctions, Iran has become one of the world’s major oil-producing countries. Trump’s sanctions against Iran may reduce Iranian crude oil sales by 300,000 to 600,000 barrels a day.
This is no different from the international crude oil market.
Some foreign media survey results showed that OPEC crude oil production continued to decline in April, as Venezuela’s crude oil production continued to decline. Affected by the political turmoil and economic crisis, the country’s crude oil output has dropped from nearly 2.5 million barrels/day in early 2016 to the current level of about 150. Million barrels per day, and this downward trend has not changed, which has provided effective support for international oil prices.
The Russian data shows that in April the country’s crude oil production remained unchanged at 10.97 million barrels per day and continued to fulfill its production reduction commitments.
Therefore, once Trump announces sanctions against Iran’s crude oil exports, international oil prices will inevitably continue to rise—a Saudi official said he expects to see the international oil price rise above the US$80/bbl mark and even hit the US$100/bbl mark.
However, the production of shale oil in the United States is rapidly increasing.
According to data released by Baker Hughes, the US oil service company, as of the week of May 4, the number of active oil drilling in the United States increased by 9 to 834, which recorded an increase for five consecutive weeks, and then reached a new high in March 2015. More data shows that the total number of active oil and gas drilling operations in the United States increased by 11 to 1,032 in the week ending May 4. The U.S. Energy Information Administration expects crude oil production in the Permian Basin will increase to a record high of nearly 3.2 million barrels per day in May, accounting for about 30% of full production.
This gives new hope to global crude oil buyers. After all, with the rapid growth of US crude oil production, it will be beneficial to the balance of supply and demand in the international crude oil market.
“At present, the relationship between supply and demand in the international oil market is balanced, but because crude oil futures institutions manipulate prices, the rise or fall in oil prices is more caused by the manipulation of institutions. Once there is a new bad news, international oil prices will inevitably appear. The relatively large drop, which is normal crude oil price fluctuations.” There are oil central government experts frankly.
Crude oil development needs to change its thinking
The continuous rise in international oil prices has caused many Chinese petrochemical companies to start worrying because the volume of Chinese crude oil imports is increasing.
Li Xiang said flatly that the domestic demand for crude oil was strong, and the domestic chain of crude oil production had a negative growth rate, far from meeting the demand growth rate. In this way, the domestic production gap can only be compensated by increasing imports of crude oil, and by the end of 2017, the foreign dependence has approached 70% (up to 68%).
"It is expected that by 2020, China will add 110 million tons of refining capacity, and the total refining capacity will reach 900 million tons. Private new refining capacity will be more concentrated in the next three years, with new capacity accounting for 64%," he said.
This means that China’s crude oil imports will continue to grow, and its foreign dependence will inevitably exceed 70%, even reaching around 75%.