OPEC Adjusts Oil Outlook: International Oil Price Enters Slow Recovery Channel

In the first week of 2021, the global oil market began to pay attention to the upcoming risk events.

On January 3, OPEC announced that it would hold a meeting on January 4 to study the crude oil production level after February. On December 3, 2020, OPEC + EU agreed to increase the collective production quota by 500000 B / D from January 2021, and will hold a meeting every month to discuss how to adjust the output of the next month, and the output adjustment should not exceed 500000 B / d.

On December 25, 2020, Russian energy minister Novak said publicly that he believed there was a possibility of increasing daily production by 500000 B / d. As a result, the market is worried that OPEC will increase production, adding another wave to the already fragile oil market.

It is reported that at the Joint Technical Committee (JTC) meeting on January 3, most experts from OPEC + did not support increasing oil production from February. As soon as the news came out, international crude oil prices rose in response to the call, with Brent oil prices rising by 1.42% to US $52.54/barrel.

"There will still be a lot of uncertainty in the crude oil market in 2021. We can't say that the oil market is at ease because of the favorable factors such as vaccines." "However, in the medium and long term, the logic for the good is unchanged," a person from a central oil enterprise told the 21st century economic report

In 2020, OPEC's total production has dropped to 24.7 million barrels a day. -Visual China

International oil price gradually stabilized

Since December last year, under the stimulation of many factors, oil prices are entering a slow recovery channel.

On December 3, 2020, the 12th OPEC and non OPEC ministerial meetings were held through a video conference. The meeting decided to increase production by 500000 barrels per day from January 2021, which will be shared equally by all Member States. Russia and Saudi Arabia will be allowed to increase crude oil production by another 126000 barrels per day.

At the same time, Libya, Iran and Venezuela will continue to exempt quotas and then agree to adjust them monthly. Iran plans to increase its crude oil and condensate production to 4.5 million B / D and exports to 2.3 million B / D by January 21, 2021.

On December 6, 2020, Saudi Arabia adjusted the official price of crude oil in January this year, increasing the price of Arabian light crude oil exported to Asia by 80 cents / barrel; reducing the price difference of all grades of crude oil supplied by the United States against the Argus sulfur crude oil index by 30 cents; increasing the official sales price of ultra light and light crude oil supplied by the Mediterranean by 20 cents, and the official selling price of medium crude oil was lower than that of medium crude oil The official selling price of heavy crude oil was reduced by 90 cents.

"In Saudi Arabia's price adjustment strategy, we can clearly see the current focus of global crude oil demand." "It has always been Saudi Arabia's strategy to raise prices in the Asia Pacific region, which is an important increase in crude oil demand, and to lower prices in Europe and the United States, where demand is still weak," the source told reporters

On December 20, 2020, the United States reached a $900 billion stimulus package, which may help to avoid another contraction of the US economy. The bail-out included a one-off check of $600 to individuals, more funding for the pay protection program, and an extension of unemployment benefits to March (US $300 a week).

"In January 2021, international oil prices may show a trend of first restraining and then rising. In the first ten days of the year, affected by Christmas and new year's day, the market trading will tend to be light, which will restrain oil prices to a certain extent." Jinlianchuang crude oil analyst Xi Jiarui told reporters.

At the same time, with the approval of the new crown vaccine, some European countries will help to control the epidemic situation after vaccination, which is very beneficial to the market expectation. Driven by the positive market mentality, the oil price may continue to rise, breaking through the previous support level.

"However, the global epidemic can not be put out in a short period of time, so the overall recovery of crude oil demand and price will still be restrained to a certain extent. When the WTI exceeds $50 / barrel, there may be an adjustment process." "In addition, the demand from China will gradually decrease in late January, because about half a month before and after the traditional Spring Festival, China will enter the most light consumption stage of the whole year. At this time, the world is also in the low season of crude oil consumption, which is not conducive to the sustained and substantial increase of oil prices."

Crude oil production or sustained growth

According to the latest report released by OPEC, as of November 2020, the daily output of OPEC countries was 26.8 million barrels, lower than 32.9 million barrels in October 2018, due to the slowdown of manufacturing industries in China and Germany, as well as increased global trade tensions, which inhibited demand.

However, non OPEC countries, including Russia, still produced 18.8 million barrels a day, bringing global production to 45.6 million barrels a day in November last year.

The shale industry in the United States is worthy of attention. According to the EIA data at that time, with the rise of oil prices since 2015, the production capacity returned to normal, and the daily production reached about 12.5 million barrels. According to the statistics of an American drilling website, according to the statistics of executives from 142 oil and gas companies, 35% of the respondents think that the WTI oil price will be between $50-54.99/barrel by the end of 2021.

According to them, the activity of the U.S. oil and gas industry increased significantly in the fourth quarter of 2020, with the business activity index rising from - 6.6 in the third quarter to 18.5 in the fourth quarter, showing a positive value for the first time in a year, proving that the oil and gas development industry in the United States is recovering.

In 2020, OPEC's total production has dropped to 24.7 million B / D, and although it has recovered from the low of 22.5 million B / D in June 2019, it is still close to the lowest level in this century.

"Last June's data was the lowest monthly daily output recorded since 1991, as OPEC + members cut production sharply as concerns over the collapse in oil prices prompted OPEC + to try to stabilize the bottom line of oil prices for the market while maintaining storage capacity." "The continuous global oil embargo in March and April last year led to the collapse of the market demand for oil and its by-products, and the refinery capacity was rapidly filled up," the said central oil enterprise source told reporters

China is different. Although the global oil price drops rapidly in 2020, the trend of increasing domestic reserves and production remains unchanged.

On January 1, 2021, 21st century economic reporter learned from CNPC that PetroChina's domestic oil and gas production equivalent exceeded 200 million tons for the first time in 2020, which is another historic leap after the crude oil production exceeded 100 million tons in 1978. It is worth mentioning that natural gas production equivalent exceeded 100 million tons for the first time, with a year-on-year increase of 11.6 billion cubic meters, which was the largest increase in history, exceeding domestic crude oil production for the first time, accounting for half of the country.

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