After three quarters, rubber has returned to the "initial starting point". Fuel oil depends on the "face" of crude oil. What is the future of the crude oil market?

In a blink of an eye, the third quarter of this year has passed, rubber has returned to the "initial starting point", fuel oil still depends on the "face" of crude oil, and crude oil has stopped its rapid rise.

The pace of crude oil price hikes is suspended

Earlier this week, oil prices continued their previous upward trend. The US crude oil price exceeded US$75/barrel and hit a new high in the past two months, while the Brent crude oil price opened higher and rose to a maximum of US$80.75/barrel, an increase of approximately from the beginning of the year. 59%, a new high in the past three years. In the middle of the week, US crude oil inventories unexpectedly rose, which triggered a short-term sell-off, and oil prices began to pull back. However, analysts predict that the increase in supply may still be unable to keep up with the pace of demand recovery, and institutional bullish sentiment remains strong.

Citigroup’s global market analysts said in a report: “The fundamentals still provide potential support to the market, and OPEC+’s release of production capacity still lags behind the demand recovery.” Citigroup predicts that even if the supply continues to increase, oil will continue to increase in the next six months. There will still be a gap of 1.5 million barrels per day in supply and demand. Earlier, Goldman Sachs stated that the recent rebound in demand will be stronger than expected, and that this rebound trend is expected to continue, and the Brent crude oil price is expected to be raised to $90 per barrel at the end of 2021.

Some US crude oil suppliers also expect that oil prices are expected to continue to rise, the market is digesting the long-term impact of supply disruptions, and meeting the needs of refineries may lead to reduced inventories. Some supply disruptions may last for several months and have led to significant reductions in U.S. and global inventories. However, U.S. refiners are looking to replace Gulf of Mexico crude oil and purchase crude oil from Iraq and Canada instead.

"The main driving force for the increase in oil prices in the first three quarters of 2021 is that OPEC's rhythmic recovery of supply and the slow recovery of shale oil production due to capital expenditures. The rapid recovery of demand drives global destocking." Ping An Futures Oil Analyst Ren Xue Said to a reporter from the Futures Daily.

As for the crude oil in the fourth quarter, she believes that the market as a whole will shift from a short supply in the previous period to a tight balance with a gradual reduction in the supply-demand gap. The supply-side output will gradually increase. OPEC+ will resume production within the plan, but there may be slight adjustments around price fluctuations. “Iranian supply is a major variable, but considering that there is still no substantial progress in recent negotiations, even if the US-Iran agreement is reached, it is expected that the supply will resume in the mid-to-late fourth quarter. The main thing to be wary of is after the agreement is reached and Iran’s floating warehouses flow into the market. Ren Xue said that at the same time, U.S. shale oil production will gradually increase. Hurricane Ada has affected the cumulative production of nearly 30 million barrels. However, the number of active drilling rigs in the United States continues to recover. The market expects that shale oil production will still continue in the fourth quarter. Certain upside.

In terms of demand, Ren Xue said that after the end of the peak travel season, the main increase in demand is expected to increase due to the unblocking of the epidemic. It mainly depends on the demand for replenishment in China and India. The fourth batch of non-state quotas in China is expected to be in the fourth quarter. However, considering China’s policies comprehensively, it is difficult for the quota to be issued to exceed expectations.

The recent surge in natural gas prices has also attracted widespread market attention. European inland natural gas inventories are slow to replenish before the advent of winter. When heating demand rebounds, the market gap will intensify, so TTF prices have skyrocketed in the past two months.

Ren Xue introduced that under the trend of coal-fired power plant closures, along with the advancement of energy transition, the problem of imbalance in the natural gas market appears. If the temperature this winter is lower than average and natural gas prices rise to the point where there is a transition economy, oil demand in winter Will increase. Recently, refined oil inventories in Europe and the United States have been at a seasonally low level. After the weather in the eastern United States becomes cold, the demand for heating oil combustion will see a peak.

Hardy, CEO of the world's largest oil trader, Vidor Group, also said recently that the shortage of natural gas supply will stimulate demand for alternative energy sources, increasing global crude oil demand by 500,000 barrels per day in the fourth quarter. This may prompt OPEC+ to increase supply. By the end of this year, crude oil prices may rise to US$80/barrel or even higher.

Regarding the market outlook, macroeconomically, the Fed’s taper expectations during the year are strong, the market has basically reflected the impact of the US debt reduction, and macro policy disturbances may be repeated. In terms of the epidemic, as the vaccination rate increases, its impact will be weakened and gradually normalized. "Under the background of the current energy structure and low crude oil inventories, the crude oil market in the future focuses on two main aspects." Ren Xue said that on the one hand, the issue of US policy balance has brought about an increase in supply. The White House said that it is cooperating with OPEC. It is also studying various methods to solve the oil cost problem. The market will pay attention to the production increase plan of the OPEC + production reduction meeting on October 4 and the negotiation of the US-Iran agreement to observe the increase in supply in the future. On the other hand, there are changes in the natural gas market. If this winter is a warm winter, the decrease in demand may drive down the price of natural gas, which will weaken the increase in demand for crude oil. Based on the above considerations, she expects that the crude oil price in the fourth quarter will oscillate mainly in the high range, and there may be a phased impulse rise.

Fuel oil depends on the "face" of crude oil

As the downstream of crude oil, the situation of fuel oil is basically the same as that of crude oil.

In 2021, bonded fuel oil experienced an oscillating and rising market, especially in the first and third quarters. Affected by the sharp rebound of crude oil, the overall upward trend was obvious. As the two major types of fuel oil, as of the end of the third quarter, both high and low-sulfur fuel oil have risen sharply. Taking Zhoushan, the country's largest bonded ship fueling port, as an example, the price of low-sulfur fuel oil at the end of the third quarter increased by 35.8% compared with the beginning of the year. The price of high-sulfur fuel oil rose by 38.4%.

According to Tian Qiujin, a fuel oil analyst at Longzhong Information, compared with low-sulfur fuel oil, the increase in high-sulfur fuel oil is relatively large. The main reason is that natural gas prices soared in the third quarter. Oil demand. At the same time, the United States and China have increased their demand for deep processing of high-sulfur fuel oil. The increase in demand has led to a substantial increase in the price of high-sulfur fuel oil. The supply of low-sulfur fuel oil in the first three quarters was relatively abundant, and the market price increase was mainly driven by the price of raw materials. At the same time, after the Chinese market imposed a consumption tax on the import of light cycle oil, the export of light cycle oil in South Korea and other places decreased, which to a certain extent caused the market to expect an increase in the supply of low-sulfur fuel oil.

From the perspective of domestic supply data, China's low-sulfur fuel oil production has maintained a steady growth in the first three quarters, totaling about 8.3 million tons, a year-on-year increase of 50%. The number of domestic enterprises with low-sulfur fuel oil production capacity increased to 35, and the export quota for low-sulfur fuel oil in the first three quarters totaled 11 million tons, which provided a basic guarantee for the increase in low-sulfur fuel oil production.

In terms of demand, the shipping market affected by the epidemic has gradually recovered, and demand in the international shipping market has improved. The bunkering business of major ports has returned to normal levels. In particular, the consumption of bonded marine fuel oil in China has increased significantly, compared with the same period in the first three quarters. The growth rate can reach 35%. The increase in output has supported China's bonded ship fuel supply companies to achieve basically the same price as the Singapore market. At the same time, the pressure of competition from domestic companies has increased, making the Chinese market price more advantageous than neighboring countries or regions, and driving a substantial increase in ship fuel supply. promote. “It is expected that China’s bonded ship fuel supply will reach 20 million tons in 2021, breaking a record high. However, the fuel supply of bonded ships in the Chinese market will still be dominated by low-sulfur fuel oil, and both high-sulfur and MGO demand 6-8%." Tian Qiujin introduced.

In terms of imports, customs data show that the imports of fuel oil on the 5th to 7th from January to August totaled 8,846,300 tons, a year-on-year drop of 4.84%. It is understood that the import volume of fuel oil increased significantly in the third quarter. On the one hand, the implementation of the consumption tax on the import of diluted bitumen has made domestic refineries tighter, and the demand for imported fuel oil for general trade has increased; on the other hand, the low-sulfur refinery in China began in August The decline in fuel oil production has led to an increase in the demand for fuel imports from bonded ships.

For the fourth quarter, Tian Qiujin predicts that domestically produced low-sulfur fuel oil may continue to shrink due to the tight export quotas for low-sulfur fuel oil. Whether the third batch of quotas will be decentralized will become an important factor in how China's production performance in the fourth quarter. While the deep processing demand for imported fuel oil from local refineries still exists, the two major market demands will drive China's fuel oil imports to maintain a high level.

From the perspective of the supply of high-sulfur fuel oil, on the one hand, it is recommended to pay attention to changes in the quality of crude oil and whether there is a possibility of continued growth in the supply of foreign oil such as Russia. The supply of low-sulfur fuel oil market will fluctuate due to the influence of the supply-demand relationship in the refined oil market, especially the diesel market. In terms of high-sulfur demand, attention should be paid to the impact of the performance of natural gas prices on fuel oil. At the same time, whether the demand for deep processing in refineries is sustainable, we need to be cautious and wait-and-see. Regarding low-sulfur fuel oil, we pay attention to changes in shipping demand. The shipping market is expected to remain relatively stable in the fourth quarter, but the possibility of continued improvement is weak.

"The supply and price trends in the international crude oil market are still the main factors affecting the trend of the fuel oil market. Maintaining a strong international crude oil price is a high probability event, and it is not difficult to break through the $80/barrel mark. When bullish factors have the upper hand, fuel For oil, we need to pay more attention to the performance of quality and price differences." Tian Qiujin said.

Finding the bottom, then finding the bottom, the rubber is back to the "initial starting point"

This year, rubber has performed relatively weakly in bulk commodities. Except for the mismatch of supply and demand of standard rubber after the beginning of the year, the price of rubber has gone out of a small climax. The rest of the time is in the game with the high inventory and the so-called weak downstream demand, and has been "seeking the bottom and finding the bottom again." the process of. On the one hand, the attributes of its own agricultural products make the peak supply season expectations always exist. On the other hand, the dominant weak downstream demand also suppresses the market’s bullish sentiment. logic.

"In the short term, the market trend of rubber after the Mid-Autumn Festival can only be evaluated in two words,'accidental'. If it is four words, it is'very unexpected'." According to Zhao Luyang, the rubber supervisor of Zheqi Industrial, If the trend of the external market during the Mid-Autumn Festival is understood as a decline caused by the fermentation of risky sentiment, then after the Mid-Autumn Festival, the trend of most domestic varieties has actually "pulled overseas sentiment from ICU back to KTV", but after the market sentiment stabilized However, the trend of rubber did not continue the pre-holiday market, but hit a new low after opening a low.

It is understood that the main ideas of the current market bearers are still concentrated in two aspects. One is that the possible high-yield supply increase in the future will lead to the shift from warehouses to the accumulation of warehouses. The other is that under the background of the actual high finished product inventory, the bears are not. It does not recognize the data of apparent consumption, but believes that this part of the de-removed raw materials is transformed into the inventory of finished products, which is accumulated in the downstream factories and the first-level distributors. That is, the de-alization of the social raw material inventory does not represent good demand. It is transformed into inventory pressure on the finished product side.

The increase in supply during the high-yield period is currently still in transaction expectations, and there is no effective accumulation in the real world. The conclusion needs to wait for a production cycle to verify. But is the downstream demand really bad? In terms of the operating rate data that can be seen in the market, after the second quarter this year, whether it is all-steel or semi-steel, the domestic start-up is at a low level during the same period.

"But the operating rate cannot simply represent tire output." Zhao Luyang believes that the operating rate is the average monthly operating load, while the output is the total output within a month. In terms of days, production capacity and even regional structure, the two cannot be simply delineated. equal sign. If we comprehensively match the tire casing output with the operating rate, it will also be found that under the low operating conditions, the data on the tire casing output does not see a significant decline.

Judging from the data on the number of days of finished product inventory turnover in the factory, the current data does have a significant increase compared with previous years. The feedback from the factories and the traders of the docking factories shows that the inventory of finished products is high and the payment cycle is elongated. But it should be noted that the domestic tire production capacity is expanding in the past year. From August 2020 to August 2021, approximately 60 million new expanded production capacity will be added globally, of which 75% are in Asia. The highest investment amounts are Giti, Linglong, and Sailun. In the context of capacity expansion , Tire inventory is likely to become a normal situation.

"This means that the current tire industry has entered a stage of capacity integration. Under the background of environmental protection, unqualified production capacity is gradually being retired, while large-scale factories may gradually occupy this part of the retired share in the form of expansion. , Especially by actively accumulating inventory backlogs and squeezing the living space of small factories through price cuts to compress tire profit margins, etc., but there is a premise here that the production profits of small factories need to be affected." Zhao Luyang told reporters.

At present, the power consumption of rubber is small on the production side, while the power consumption on the demand side is relatively high. Under the background of power restriction, both supply and demand are weak, and because the demand side consumes more power than the supply side, the restriction on the demand side will be greater than the supply. In this regard, Zhao Luyang believes that power curtailment does have an impact on downstream demand, but the downstream is already in a state of high finished products and low start-ups. If the current high start-up is still high, then the impact of the power curtailment will be reflected more directly, but the current "low start-up" +Limited power", for the downstream, is more like an opportunity to take the initiative to destock finished products.

It is worth noting that under the background of "low start + curtailment", inventory can still be maintained in a state of continuous depletion. According to Zhao Luyang, explicit data from the entire industry chain shows that the current state is that midstream inventories continue to deplete, downstream raw material inventories are low, finished goods inventories are high, and finished car inventories are low. "If there is no problem on the output side, then there are two destinations for upstream raw materials, one is to generate inventory accumulation in the upstream, and the other is to give priority to overseas factories."

Assuming that the raw materials are accumulated in the upstream warehouse, they will accumulate in two places: rubber farmers and factories. The rubber farmers have no savings. If they are actively accumulated, there will be no cash if they are not delivered in time. If they are passively accumulated, then the price of the raw materials should be at your disposal. There was a drop in the fire sale, rather than the current high. As for the raw material storage of factories, if it is because of profitable and active storage, except for some factories with strong capital capacity, other factories cannot continue to accept raw materials. If it is passive storage, then the price of raw materials will also fall.

"So it cannot be ruled out that the current situation is caused by the good demand of overseas factories." Zhao Luyang said, and there are also some overbought situations in overseas factories, that is, shipping problems have caused the raw materials purchased in the early stage to continue to be unable to reach the port, and the factory is in order to maintain its own production. If you keep buying goods at a high price, there are two inferences: one is that the demand is not bad, and the other is that there is no inventory in the factory. If a large amount of cargo is stranded on the way due to shipping, the improvement of this situation will depend on the adjustment of ocean freight.

Judging from the performance of raw material data, there are indeed some signs of raw material output recently. Zhao Luyang reminded, especially the glue-the data concatenation of the white film line. "The output of glue will first hit the high-profit white film-the profit of the smoked film, and then it will be transmitted to the cup glue. But from the perspective of the delivery profit of the raw material to Singapore, the recent decline in the raw material is actually more rapid than the finished product, and Raw materials still have a little margin for processing profit for Yuanyue's NR, which is more unfavorable for the bulls. The follow-up still depends on whether this profit margin will be narrowed or whether the price of raw materials can be stabilized at this position." He said.

(Source: Futures Daily Net)