International oil prices continued to rise earlier momentum is no longer. Affected by the fall in crude oil prices, domestic refined oil prices have achieved “four consecutive declines”. Analysts generally believe that under the background of expected reduction in market demand and an increase in the supply side, international oil prices may still be running weakly, driving the refined oil market to decline.
Refined oil prices drop for four straight
At 24:00 on August 9, domestic refined oil ushered in a “four consecutive declines” as scheduled.
The National Development and Reform Commission said on the 9th that according to the recent changes in oil prices in the international market, according to the current refined oil price formation mechanism, since 24:00 on August 9, the domestic gasoline and diesel prices will be reduced by 130 yuan and 125 yuan per ton respectively. On the national average, No. 92 gasoline is reduced by 0.1 yuan per liter; No. 95 gasoline is reduced by 0.11 yuan per liter; No. 0 diesel is reduced by 0.11 yuan per liter.
The decline in refined oil prices continued to be affected by the sluggish international crude oil market.
On August 9, the WTI September crude oil spot contract on the New York Mercantile Exchange closed down $0.26, or 0.29%, to $90.5/barrel. The Brent October crude oil spot contract on the Intercontinental Exchange closed down 34 cents, or 0.35%, to $96.31 a barrel.
However, Shanghai crude oil prices rose in the night session, and the main period about SC2209 closed at 674.5 yuan/barrel, up 9.9 yuan/barrel, or 1.49%. As of the close on August 10, the main contract closed at 675.5 yuan / barrel.
After the implementation of the policy of lowering the retail price of gasoline and diesel at 24:00 on August 9, the first “four-straight decline” was achieved during the year, and it also became the first “four-straight decline” since 2019.
According to Zhuo Chuang data, since the “four consecutive declines”, the cumulative decline of gasoline and diesel has been 1110 and 1070 yuan, and the discounted prices of 92# gasoline, 95# gasoline and 0# diesel have been reduced by 0.87, 0.92 and 0.91 yuan respectively.
From the perspective of the whole year of 2022, after the implementation of this price adjustment, the retail price limit of refined oil products will undergo a total of 15 adjustments, of which 10 times are raised and 5 times are lowered. / ton, 1550 yuan / ton, the discounted price of 92# gasoline, 95# gasoline, 0# diesel is 1.26 yuan, 1.34 yuan, 1.32 yuan respectively.
After the current round of cuts in the retail price of refined oil products, the cost of oil consumption for short-term household consumers has dropped.
Taking a family car with a fuel tank capacity of 50L as an example, filling a tank of 92# gasoline will cost about 5 yuan less than before. In terms of fuel consumption, taking a small private car that runs 2,000 kilometers per month and consumes 8 liters of fuel per 100 kilometers as an example, before the next price adjustment window opens (at 24:00 on August 23, 2022), the cost of fuel consumption for consumers will be reduced by 70%. Yuan or so. In the logistics industry, take a heavy-duty truck with a monthly running distance of 10,000 kilometers and a fuel consumption of 38L per 100 kilometers as an example. Before the next price adjustment window opens, the fuel cost of a single vehicle will drop by about 195 yuan.
The market may still face a downturn
From a high of about US$125/barrel in mid-June to around US$90/barrel today, international crude oil prices have sharply retraced their previous gains in the past two months, with a drop of nearly 30%.
However, analysts generally believe that the downward trend of crude oil may still be difficult to stop.
Han Zhengji, an analyst at Jinlianchuang, said that since August, the spot spread of international crude oil has shrunk rapidly, which means that the market’s previous expectation of a shortage of crude oil spot market supply has been significantly eased. Although OPEC+ decided to increase production by a symbol of 100,000 barrels per day at its meeting on August 3, it cannot change the fact that the crude oil market is heading for oversupply.
From the perspective of supply, the main basis for driving oil prices higher in the first half of the year is the expectation that the sanctions imposed by Western countries against Russia may lead to a significant reduction in supply. However, Russia’s crude oil production did not plummet as expected. In June, Russia’s crude oil production was 10.98 million barrels per day, down only 300,000 barrels per day from the beginning of the year, and even an increase of 300,000 barrels per day year-on-year.
From the perspective of demand, under the combined effects of the global economic recession, monetary tightening in major economies, the release of strategic oil reserves, high oil prices, repeated and diverse epidemics, and other factors, crude oil demand has inevitably declined.
Zhuochuang analyst Yang Xia also analyzed that in the next refined oil pricing cycle, we need to pay attention to the support of US crude oil at US$90 per barrel, and be alert to the risk of falling.
From a macro perspective, the market is worried that the risk of recession is significantly lower than before, and the pressure on the oil market in the short term is reduced. However, from a fundamental point of view, demand has begun to shrink, especially in the United States and Europe, where gasoline demand has declined, and market worries about recession have become reality. Although OPEC+ controls production to support oil prices, the decrease in demand cannot be changed, and international oil prices are mainly weak and fluctuating, which means that there is a possibility of a “five consecutive declines” in the new round of retail price limit adjustments for refined oil products.
Baocheng Futures believes that from the fundamentals of supply and demand in the oil market, with the implementation of the production increase agreement by OPEC+ oil-producing countries in August, the dividends of the production reduction policy since the epidemic will be exhausted, and the advantage of tight supply in the oil market will be lost. The increased pressure of economic recession brought about by interest rate hikes will directly weaken crude oil demand expectations. It is expected that the pressure of excess supply and demand of global crude oil will be highlighted in the third and fourth quarters, and the oil price will still face pressure after the completion of the market recovery.
Guotai Junan Futures believes that in the second half of 2022, the overseas tightening cycle will accelerate, and there should not be too many doubts about the risk of trend peaking and falling back in bulk commodities. In the first half of the year, after the profit of chemical industry continued to be low, the trend of non-ferrous products has declined since April, and the black line has fallen sharply since June, crude oil has been under great downward pressure on the rotation of the sector. In addition, considering that the flow of Russian crude oil to the Asia-Pacific has been fully opened up, after the market has priced the good of 90% of Russian crude oil imports before the end of the EU, it may be suppressed by the marginal negative of Russian oil going south for a long time in the future, especially the possibility of weakening the Asia-Pacific region. The seasonal peak season in the second half of the year is favorable.