PTA: Crude Oil Yield Reduction Agreement Reached Market Sentiment LED Market Or Coming To An End.

When will the market sentiment of crude oil lead to an end? Will the news of the reduction of production fail after the landing? The following chart can see PTA from price, supply, demand, base and processing interval, and believe or will have a better understanding of the market.

Agreement on crude oil reduction

OPEC+ finally reached a reduction agreement on Monday morning. From the final official news of the agreement, Mexico finally won the victory. The total reduction in production capacity of the production restriction alliance was reduced from 10 million barrels per day to 9 million 700 thousand tons per day. Mexico only needed to reduce output by 100 thousand barrels per day. There was no change in the three stages of production reduction benchmarks, regulations and points, compared with that announced on Thursday. Special, Kuwait and UAE will have an additional production of 2 million barrels per day, the export volume of legal persons (from Iran petroleum ministry). The first quarter IEA Member States will increase strategic reserves of crude oil purchases, and the specific procurement scale will be announced on Wednesday. The number of non OPEC+ member countries such as the United States, Canada and Brazil has not been announced. On Wednesday, the Dezhou railway Commission (Dezhou oil and gas producer regulatory authority) will also hold meetings to discuss production cuts.

Super reduction under epidemic situation

The conference decided to start the three phase of the production reduction agreement from May 1, 2020. Since May 1, 2020, its total crude oil output has been cut by 10 Mb / D for a period of two months (ending in June 30, 2020). In the 6 months from July 1, 2020 to December 31, 2020, the total adjusted amount was 8 MB / D. The adjustment of 6 MB /d will be carried out in the 16 months from January 1, 2021 to April 30, 2022. The adjustment is based on the oil production in October 2018. The kingdom of Saudi Arabia and Russia have the same baseline level, both of which are 11 MB / D. The agreement is valid until April 30, 2022, but the extension of the agreement will be examined in December 2021.

Global crude oil loss

Because the epidemic affects global demand, and there are great differences in the epidemic stage, medical level and epidemic prevention measures, the loss of global demand is not accurate, and can only be estimated from the magnitude. Goldman Sachs's demand assessment model reported in March 25th estimated that demand in April would be 18 million 680 thousand barrels / day, 11 million 840 thousand barrels per day in May, and 5 million 900 thousand barrels per day in June. The market thinks that this demand loss may rise after the emergence of new crown cases in India slums, Asian African countries and other areas with poor medical conditions. At present, the loss is generally expected to be 2000-2500 barrels per day.

Remaining storage capacity of global crude oil

In its April 1st report, CITI disclosed crude oil inventories in different parts of the world. The nominal storage capacity, historical maximum inventory, 80% and 90% effective storage capacity were taken into account. At present, the global crude oil storage capacity is about 6 billion 250 million barrels, including 4 billion 340 million barrels of merchant reserves and 1 billion 910 million barrels of war reserves. The total inventory level of the world is about 4 billion 500 million barrels, of which 2 billion 900 million are commercial reserves and 1 billion 578 million are war reserves. That is to say, as of the first quarter of 2020, the world was full of money, and 1 billion 700 million of the remaining storage capacity was distributed throughout the world.

Where is the oil price center?

The purpose of our reduction is to prevent oil prices falling below the cost of cash, resulting in a passive reduction in production or even a permanent exit from the market. In addition, a large number of medical expenses also occupy the reserves of various countries during the epidemic period, affecting the fiscal balance, so we need stable oil prices. But whether we can fight the demand loss caused by the epidemic by 100%, we think this is not the main purpose. In the case of 100% losses, super production will not make a breakthrough in oil prices. The market thinks that WTI's center is at 25-35 US dollars / barrel, the US oil enterprises are free competition market, the government's mandatory leading force is weak, WTI is over 35 US dollars, and the guarantee force's comeback will obviously affect the effect of joint production reduction. On this basis, the reduction of production is a paradox.

When will the market sentiment of crude oil lead to an end? Will the news of the reduction of production fail after the landing? The following chart can see PTA's everything from price, supply, demand, base and processing interval, and I believe we will have a better understanding of the market.

From the source of crude oil and the supply and demand of PTA itself to the terminal, the individual summaries are as follows: OPEC+ finally reached an agreement of 9 million 700 thousand barrels / day reduction in May, thus ending the price war between Russia and Russia. At present, the global crude oil supply surplus is as high as 20 million barrels per day (the International Energy Agency estimates), and the persistence of international crude oil price rebound still depends on the G20's additional production reduction; and 4 In June, the domestic PTA load increased significantly, and the supply increased considerably. During the Qingming Festival, the production and marketing of downstream polyester products were better. Most of the product inventory was reduced, to a certain extent, the inventory pressure of the factory products was alleviated. However, the impact of events, the new orders in Europe and the United States in April were still scarce, domestic and foreign demand was worrying, polyester products or temporary inventory transfer, and polyester load upgrading still had greater pressure. At present, PTA has accumulated more than 10000 tonnes of tonnes, and the continuous expansion of natural inventory and processing area continues to suppress the market now. After the Qingming Festival, the polyester production and sales in the lower reaches of the Yangtze River once again fell, and the base remained weak. On the other hand, the crude oil production agreement will eventually fall to the ground. If the market or cash is good, it will be bad after that. And foreign events will hit the demand for crude oil and make the risk appetite cautious. The chemical market will rebound or will come to an end. In the light of the current fundamentals, the PTA market will continue to see the bottom of the shock. Confirm that the TA09 contract, the radical speculators unilaterally wait for a short selling opportunity (reference to 3700 yuan near the front line, TA05 can refer to 3600 yuan near the front line), arbitrage, spot traders continue to be risk-free arbitrage, speculation continues to pay attention to TA9-1 counter opportunities.