International oil prices rose more than 1% on the 4th, as the Organization of Petroleum Exporting Countries (OPEC) and other major oil producers expected to extend their production cuts. Analysts said that the current trend of international oil prices is mainly affected by changes in supply and demand fundamentals. The current level of international oil prices is moderate, the supply-demand relationship lacks new guiding factors, and oil prices may be consolidated for some time.

The price of light crude oil futures for April delivery on the New York Mercantile Exchange rose $0.79, or 1.42%, to $56.59 a barrel at the close of the day. London Brent crude oil futures for May delivery rose $0.60, or 0.92%, to $65.67 a barrel.

Russia’s oil minister, Nowak, said Russia would speed up production cuts, helping boost the market on the 4th. According to Reuters, Nowak said Russia planned to accelerate the pace of crude oil production reduction this month, reaching the level promised by the cut agreement by the end of March. Russia is OPEC’s largest non-member country ally. The report also said that OPEC and its allies may decide on a new production policy in June rather than at the Vienna meeting in April. According to sources, OPEC and its allies are expected to extend the cut-off plan at the June meeting, but the final decision will also depend on the extent of sanctions imposed by the United States on OPEC member states Iran and Venezuela.

At the end of last year, international oil prices fell to their lowest level in nearly a year and a half. Affected by OPEC output cuts and other factors, oil prices in New York and Brent crude oil prices rebounded sharply. On January 1 this year, OPEC and its allies began a new round of production cuts to avoid oversupply leading to lower oil prices. Non-OPEC oil-producing countries such as OPEC and Russia have agreed to cut production by 1.2 million barrels a day for six months.

In recent weeks, crude oil prices have continued to be supported by output cuts in OPEC and its partners. In February, crude oil supply in OPEC member countries fell to a four-year low as Saudi Arabia and other countries cut production and Venezuela’s oil industry was sanctioned by the United States. By February, OPEC had fully fulfilled its commitment to reduce production by 800,000 barrels a day compared with October last year, according to a Reuters survey. In addition, exempted oil-producing countries had voluntarily cut production by 900,000 barrels a day since October, bringing OPEC’s total output reduction to 1.7 million barrels a day.

Not long ago, U.S. President Trump “shouted” to OPEC that international oil prices were too high, which led to a sharp drop in oil prices, but then quickly rebounded. Trump wants OPEC and other oil-producing countries to increase crude oil supply, but OPEC members led by Saudi Arabia disagree.

According to the Wall Street Journal, Saudi Arabia’s oil minister, Falkh, said OPEC may continue to cut production in the second half of this year. Oil producers need to be “calm” and “a long-term, cautious strategy” will avoid a global economic slowdown, Fallich said recently. As U.S. oil production and stockpiles remain high, Fallich said he tends to think production cuts may continue in the second half of the year.

In addition, to cut spending, the number of oil rigs that U.S. energy companies were looking for new reserves fell to the lowest level in nearly nine months last week. That factor is also helping oil prices recover.

However, analysts believe that the current level of international oil prices reflects the relationship between supply and demand in the market, and it is difficult to rise further before new stimulus factors emerge. Richard Gori, head of Asia operations at JBC Energy in Austria, believes that current oil prices are in a “pleasant” price range for both oil producers and consumers.

Michel Kapadia, CEO of Sun Global Investment, believes that with oil prices rising, increased oil production by U.S. shale oil producers may put pressure on oil prices in the coming months.

Crude oil production in the United States and Canada has increased recently. The U.S. Department of Energy said it would release 6 million barrels of crude oil from its strategic oil reserve base in the near future.

At the same time, the demand for international crude oil has decreased due to the expansion of new energy applications and other factors. Relevant agency data show that the market demand in the United States has been sluggish at the end of last year. Gene McGillian, an analyst at Traditional Energy, said worries about slowing economic growth and reduced oil demand weighed on international oil prices.

South Korea National Oil Corp., compiled by S&P Global Platts, showed the biggest increase in gasoline demand in January in five and a half years, driven by falling retail prices and government tax cuts, according to Seoul Energy Information.

However, as gasoline prices have begun to climb, South Korea’s demand for automotive fuel is expected to slow this year, and the government’s tax cuts will end in early May.

In January, South Korea consumed 7.33 million barrels of gasoline, up 12.6% from 6.51 million barrels a year earlier. This is the biggest increase since August 2013, when gasoline demand increased 12.8% year-on-year.

In terms of gasoline consumption, this is the largest since August 2016, when the country consumed 7.8 million barrels of gasoline during the summer driving season.

The factors driving gasoline demand also led to the fastest growth in gasoline consumption since July 2017 in January.

An official from South Korea National Petroleum Corporation said: “The rising demand for automotive fuel is mainly driven by falling retail prices and falling crude oil prices.”

This OPEC and Russia are trying to cut production, while the United States is still increasing its efforts to produce oil. Two major US oil giants, Chevron and ExxonMobil, have announced plans to intensify their efforts to exploit the country’s largest shale field.

Chevron announced Tuesday 5 ET that by the end of next year, it plans to produce 600,000 barrels of oil and gas per day in Permian Basin, Texas and New Mexico, and 900,000 barrels by the end of 2023, an increase of nearly 40% over Chevron’s expected output of 650,000 barrels per day in the next five years.

ExxonMobil announced on the same day that it plans to increase its daily oil and gas production by 80% to 1 million barrels in Permian Basin as early as 2024.

In the fourth quarter of last year, the output of ExxonMobil’s Permian Basin has surged 93% year on year. Neil Chapman, Senior Vice-President of the Division, said that Permian’s growth strategy is increasingly confident because of its unique development plan.

Wall Street has noticed that even worse for OPEC’s production cuts, the shale oil production profits of American oil giants are staggering.

ExxonMobil expects its Permina assets to deliver healthy returns even when crude oil prices are low. If the price of crude oil futures falls to $35, Permain’s assets will return an average of 10%.

Chevron CEO Mike Wirth commented that shale oil has become a large-scale game, not one that wins the fastest barrel of gold, but one that produces the strongest machines steadily.

Preliminary U.S. government estimates show that Permian Basin will produce 4 million barrels a day this month, accounting for about a third of total U.S. production. At present, the U.S. produces more than 12 million barrels of oil per day, which has reached a record high and its import volume has reached a new low.

Last Wednesday, data released by the U.S. Energy Information Agency (EIA) showed that U.S. crude oil imports fell by 1.61 million barrels a day in the week of February 22, the lowest level since 1996. Among them, 346,000 barrels of crude oil were imported from Saudi Arabia per day, a record one-week low.

From December last year to January this year, OPEC has achieved the largest reduction in production for two consecutive months. International crude oil has rebounded continuously since this year. In January, the U.S. oil distribution increased by more than 10%, the largest increase in the same period in history and in more than a decade, respectively. In the past two months, the U.S. oil distribution rose by more than 20%.

Earlier on Wall Street, Trump, for the first time since OPEC + reached a cut-off agreement in December last year, reintroduced his criticism of OPEC’s cut-off and higher oil prices, saying that “the world’s fragile economy cannot afford it”. As of Monday, however, the media had sent out news for the second time that OPEC would decide to extend the production cuts by mid-year to the end of the year.

Goldman Sachs recently reported that OPEC’s production cuts had been drastically cut from the start. With the decline in Venezuela’s crude oil production, Russia accelerated its production cuts, and global crude oil production cuts were already faster than expected. Therefore, OPEC may lift production restrictions and make new plans by May or June.

SITUATION: The SC1904 contract of Shanghai International Energy Exchange Center opened at 438 yuan/barrel, with a maximum of 443.6 yuan/barrel, a minimum of 434.1 yuan/barrel and a closing price of 434.5 yuan/barrel, down 4.8 yuan/barrel from the previous trading day, a decline of 1.09%. Volume fell back to 2519,000 hands, with an increase of 1466 to 45128 hands.

Macroscopic information: 1. On Tuesday (March 5), the Central Bank of China announced that the intermediate price of RMB against the US dollar was 6.6998, up 51 basis points from the previous trading day.

Industry chain information: 1. According to Reuters reports, OPEC sources said that OPEC and its allies may decide on a new production policy in June rather than at the Vienna Conference in April. OPEC + is expected to extend the production reduction plan at the June meeting, but it depends mainly on the extent of sanctions imposed by the United States on OPEC member states Iran and Venezuela. 2. Russian Energy Minister Alexander Nowak said on Monday that Russia will accelerate the pace of crude oil production reduction this month, and plans to reach OPEC+reduction share by the end of March or early April. 3. Libya National Petroleum Corporation said that the Shalala Oilfield will restart oil production of 30,000 barrels per day, and the force majeure of the oilfield is now lifted; it is reported that the normal production of the Shalala Oilfield is 315,000 barrels per day.

Spot price: Oman crude oil spot price of $65.3 per barrel on March 4, down 1.4 U.S. dollars per barrel from the previous day (converted to 437.8 yuan per barrel at the exchange rate of RMB on that day); Shengli crude oil spot price of $58.2 per barrel, down 1.7 U.S. dollars per barrel from the previous day.

Warehouse receipt inventory: The number of warehouse receipts designated by Shanghai International Energy Trading Center for delivery is 2.774 million barrels, which is unchanged from the previous trading day.

Summary of opinions: International crude oil futures prices show an oscillating rebound, Asian market growth consolidation, Brent crude oil futures prices to 65.4 U.S. dollars/barrel line, WTI crude oil futures prices to 56.4 U.S. dollars/barrel line, Brent crude oil and WTI crude oil prices are in the range of 9 U.S. dollars/barrel, Shanghai crude oil 1904 contract prices closed down, water discount than Brent crude oil about 0.6 U.S. dollars/barrel, compared with 4 Oman crude oil spot discount. Water is about $0.5 per barrel. According to the news, China and the United States seem to be close to reaching an agreement. The tariffs imposed by the United States on at least $200 billion of Chinese goods are expected to be withdrawn. The trade negotiations are expected to boost the market with optimism. China announced its GDP growth target of 6%-6.5% in 2019, and worries about economic slowdown still weigh on the market atmosphere. Sources said that OPEC + is expected to extend the production reduction plan at the June meeting, but mainly depends on the degree of sanctions imposed by the United States on OPEC member countries Iran and Venezuela; Russian Energy Minister Nowak said that Russia plans to accelerate the pace of crude oil production reduction this month; Saudi Arabia plans to further reduce crude oil production in March to 9.8 million barrels per day; OPEC’s statement will firmly reduce production and the geographic situation will support the oil market. In the United States, repeated high production and demand concerns continue to exacerbate market volatility, focusing on API U.S. inventory report. Technically, the forward price of SC1904 contract declined, and the forward price continued to be subject to 10-day average pressure. The lower test was supported by the 40-60 day average area. The short-term Shanghai crude oil futures price showed a high oscillation trend. Operationally, we recommend 425-448 yuan/barrel interval trading.

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.