Us WTI crude oil February futures rose $0.59, or 1%, to $59.17 a barrel on Monday (January 20), and will not close today due to the US holiday. Brent crude oil futures closed up $0.65, or 1 percent, at $65.50 a barrel on Monday. Crude oil supply in the Middle East is at risk and the morale of crude oil bulls is encouraged. WTI crude oil futures in the U.S. peaked at $59.66/barrel, while Brent crude oil futures peaked at $66.00/barrel.
Fundamentals positive factors:
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Iraq’s al Ahdab oil field was forced to shut down, with an average daily production of 70000 barrels / day as protests intensified. At the same time, Libya’s two major oil fields were forced to close because of the closure of an important pipeline.
According to the latest monthly report released by the International Energy Agency (IEA) on Thursday (January 16), the growth expectation of global crude oil demand in 2020 will remain unchanged, maintaining 1.2 million barrels / day. IEA said there are risks in Iran’s crude oil supply, mainly affected by the situation in the Middle East. U.S. economic sanctions against Iran and domestic protests threaten the country’s oil supply. It is worth noting, however, that internal security problems in Iraq are limiting the country’s production plans, which may make it difficult for global crude oil supply to meet long-term demand growth. At the same time, crude oil demand of OECD member countries is expected to decrease by 115000b / D in 2019, but it is expected to increase by 275000b / D in 2020, due to the improvement of GDP growth and the decrease of trade risk.
U.S. crude oil inventories fell 2.549 million barrels to 425.5 million barrels in the week ended January 10, according to a report released by the U.S. Energy Information Agency (EIA) on Wednesday, with the market predicting a decrease of 343000 barrels.
According to the latest survey released on Monday (January 6), crude oil production of the organization of Petroleum Exporting Countries (OPEC) fell in December due to Nigeria and Iraq’s more strict compliance with the production reduction agreement, and Saudi Arabia, the main exporter, further cut crude oil production before the new production restriction agreement was reached. According to the survey, OPEC’s crude oil production last month was 29.5 million barrels per day. It’s down 50000 BPD from the revised figure in November. Improvements in Nigeria and Iraq, which had previously failed to meet production reduction commitments, helped the implementation rate rise from 153 per cent in November to 158 per cent in December.
Fundamentals negative:
The International Monetary Fund’s optimism about global economic growth has declined, warning that the outlook for the global economy remains weak and there is no clear sign of a turning point. In the latest world economic outlook report, the IMF lowered its forecast of global economic growth to 3.3% in 2020, 3.4% in October last year, and 2.9% in 2019, 3% previously. The main reason for the downward correction is the slowdown in India’s economic growth. The global economic growth rate is expected to be reduced to 3.4% in 2021 and 3.6% in October last year
Data released by Baker Hughes on Friday (January 17) showed that the number of active US oil wells increased by 14 to 673 in the week ending January 17, the first increase in four weeks. There were 852 in the same period last year. According to the latest EIA report, the growth rate of US crude oil production is expected to slow to 3% in 2021, the lowest since 2016. At that time, crude oil production in the United States recorded a decline, while in 2019, it increased by 18% to a record high of 12.2 million barrels / day. Meanwhile, US crude oil production is expected to further climb 9% to 13.3 million barrels / day in 2020.
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Crude oil inventories in Cushing, Oklahoma, rose 342000 barrels last week in the week ended January 10, after falling for nine consecutive weeks, according to a report released by the EIA on Wednesday. U.S. refined oil inventories rose 8.171m barrels, a three-week increase, with the market predicting an increase of 2.477 million barrels. U.S. gasoline inventories rose 6.678 million barrels, a 10 week increase, with the market predicting an increase of 3.642 million barrels. In addition, domestic crude oil production in the United States last week increased by 100000 barrels to 13 million barrels per day, a record high.
The organization of Petroleum Exporting Countries (OPEC) said on Wednesday (January 15) that despite the increase in global demand, OPEC expects the organization’s crude oil market demand to decrease in 2020, as competitor production growth will grab market share and the United States is expected to set another production record. In its market report, OPEC predicted that in recent years, driven by shale gas, U.S. crude oil production has soared, and the total U.S. crude oil production is expected to break the milestone of 20 million barrels / day for the first time. Meanwhile, OPEC said that in the fourth quarter of 2020, the total output of crude oil and liquid fuel in the United States will reach 20.21 million barrels / day, almost meeting the demand of 21.34 million barrels / day in the United States. OPEC, on the other hand, has raised its forecast for supply growth in non OPEC oil producing countries in 2020, which is expected to increase by 180000 barrels per day to 2.35 million barrels per day from 1.86 million barrels per day in 2019.
The US Energy Information Agency (EIA) pointed out in the short-term energy report that the US crude oil production is expected to increase by 1.06 million barrels / day to 13.3 million barrels / day in 2020, higher than the previous expectation of 13.18 million barrels / day. In 2021, the crude oil production of the United States is expected to further increase by 410000 barrels / day to 13.71 million barrels / day.
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