There are loopholes in the main logic of Goldman Sachs and other investment banks’ bullish oil prices this time. Investors should use such reports with caution during the investment process and conduct further exploration and analysis of the reasons given in these reports. If downstream demand companies believe that the current oil price is at a relatively high level, they can gradually reduce the proportion of buying and hedging, and resume hedging operations after oil prices enter an upward cycle again. As for traders, their operations are relatively flexible. They mainly maintain the value of their inventory during the period and use the spot market to optimize profits.
International oil prices are running at high levels under the bullish resonance
Recently, in the bullish market Under the resonance of factors, international oil prices have always been running at high levels. Not only did Brent crude oil once exceed US$75/barrel, but WTI oil prices have also been trading above US$70/barrel for many days. In fact, in the face of a winter that may become colder, Goldman Sachs has recently further raised its forecast for oil prices in the fourth quarter, triggering heated discussions in the market.
What is the current supply and demand situation in the market? On what factors did Goldman Sachs and other investment banks make such predictions? What should the market pay attention to in crude oil allocation in the coming period? With the above questions, the reporter interviewed many industry experts. According to the experts interviewed, although oil prices lack a basis for decline in the short term and are likely to run at a high level, in terms of fundamentals, their upside space is relatively limited.
In the opinion of Gui Chenxi, a crude oil researcher at CITIC Futures, the recent strong trend in oil prices is the result of the resonance of supply and demand and financial factors.
In terms of supply and demand, supply disruptions caused by hurricanes in the United States and a rebound in demand during the peak summer and autumn travel seasons in Europe and the United States have brought a short-term boost to oil prices that have fallen from previous highs. In this regard, Zhong Meiyan, director of energy research at Everbright Futures, agreed. According to reports, the impact of this seasonal hurricane on U.S. crude oil supply was greater than expected. In late August, Hurricane Ida passed through, resulting in a loss of U.S. crude oil supply of up to 1.4 million barrels per day. In addition, the subsequent supply recovery was much slower than expected. Oil price bulls have increased confidence. At the same time, market demand has also shown a certain degree of resilience. From the perspective of the United States, against the backdrop of reduced refinery operating rates, crude oil and refined oil inventories have both fallen, and refinery profits have remained high. This has led to the three major institutions raising their prices at the beginning of the month. The expected growth rate of crude oil demand and consumption for the whole year.
As for finance, Zhong Meiyan said that the recent coordinated rise in energy varieties has supported oil prices. Foreign natural gas prices continue to hit new highs. The rise in gas prices has led to a surge in electricity prices, forming a chain reaction. Crude oil The price focus has also gradually increased. Taking into account the Federal Reserve’s high tolerance for high inflation and the latest slowdown in CPI month-on-month growth in August, the Federal Reserve has tightened or slowed down its bond-buying pressure. Gui Chenxi believes that these may continue to provide support for the current high liquidity premium.
However, from a fundamental perspective alone, Gui Chenxi told reporters that the current fundamentals are temporarily unable to support the continued sharp rise in oil prices.
This is because recent data show that not only the global economic growth continues to slow down (the global PMI in August fell for three consecutive months to the lowest level of the year), but the economic growth rates of the United States and the United Kingdom dropped to 6- and 8-month lows respectively, emerging market PMI entered the contraction zone for the first time since June 2020), and crude oil supply and demand expectations were also lowered (EIA’s September report lowered both supply and demand year-on-year growth expectations in 2021, demand The downward adjustment is greater than the supply, and the accumulation forecast is slightly increased), and the impact of short-term events such as “Ada” is gradually recovering. Under such circumstances, oil prices continue to rise without relevant support.
In Zhong Meiyan’s view, Goldman Sachs has once again announced that oil prices will rise to US$80 per barrel. On the one hand, it is based on the current relatively optimistic demand expectations, and on the other hand, it believes that the overall increase in supply Quantity is limited. “Considering the current relative tightening of domestic import quotas, there is a high probability of a marginal decline in domestic demand. In addition, the U.S. supply is recovering, which will overall ease the tightness of crude oil supply in the U.S., and will also lead to continued additions on the crude oil supply side, and there is no way for oil prices to continue to rise. driving forces. Therefore, we take a relatively cautious view on oil prices at current levels.”
In addition, Gui Chenxi told reporters that when judging the trend of oil prices, in addition to considering the supply and demand of crude oil itself and financial factors, the space above crude oil also needs to pay attention to the political attributes Influence. In view of the recent statements by China and the United States to suppress the current excessively high raw material prices, under such circumstances, even if there is still some room for oil prices to rise, it will be relatively narrow.
Dialectical analysis of the reasons why international investment banks are bullish on oil prices
In fact, According to an industry insider who did not want to be named, the recent so-called severe winter by Goldman Sachs and other investment banks has obviously led to the judgment that global oil demand may surge by 1 million to 2 million barrels per day, and that oil prices are expected to hit the US$100 mark under such circumstances. There is a strong tendency for subjective assumptions, which also makes people doubt the real purpose of these international investment banks in singing bullish oil prices.
You know, last year Goldman Sachs and many other investment banks made profits of more than US$1 billion from commodity price fluctuations. In the opinion of the above-mentioned people, such huge profits are related to the frequent propaganda of these investment banks to encourage investors to blindly participate in the market.
The market performance since June this year also proves this point well. It is understood that as the epidemic was regained control in June this year, the recovery of crude oil demand accelerated significantly. At this time, major global investment banks represented by Goldman Sachs continued to increase global crude oil demand.In the second half of the year, as OPEC’s gradual resumption of production and destocking slowed down, supply and demand support weakened, and the Federal Reserve tightened its loose monetary policy, financial premiums fell. Properties may face an inflection point.
Under such circumstances, she believes that without additional bullish push, the upper space will gradually narrow. If the Fed’s tightening expectations are fulfilled, oil prices will face greater correction pressure; if loose monetary policy continues, oil prices may maintain high oscillations.
Under such circumstances, Zhong Meiyan believes that on the one hand, relevant companies still need to protect the cost of raw materials accordingly, and on the other hand, they can also use over-the-counter options, futures and other tools to conduct Risk Management.
Specifically in the industrial chain, Gui Chenxi suggested that upstream crude oil production companies can learn from Pemex’s operating model and choose opportunities to operate within an acceptable range where crude oil prices are higher than costs. Sell to preserve value and lock in selling profits. As for downstream demand companies, if they believe that the current oil price is at a relatively high level, they can gradually reduce the proportion of buying and hedging, and resume hedging operations after oil prices enter an upward cycle again. As for traders, their operations are relatively flexible. They mainly maintain the value of their inventory during the period and use the futures and spot market to optimize profits (such as domestic oil trading companies’ common futures and current linkage operations). </p
