Monday , December 6 2021

News analysis: Overproduction of crude oil production caused oil prices in New York to dim



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Xinhua News Agency, New York, December 18th from

News Analysis: Overheated crude oil production concerns oil prices in New York dropped

Xinhua News Agency reporter Wang Nai-shui

The latest report from the US Energy Information Administration predicts that the US daily output of shale oil in December will be the first time in history to stand at 8 million barrels. Concerned over the excess supply of international crude oil, international oil prices caused falling during the third trading day of the 18th, while oil prices in New York dropped more than 7%, the lowest since August 2017.

From the end of the day, the light crude oil premiums fell in January 2019 on the New York Mercantile Exchange $ 3.64 to close to $ 46.24 a barrel, a decline of 7.30%. London Brent Crude Oil Futures for February 2019 fell $ 3.35 to close to $ 56.26 per barrel, a decrease of 5.62%.

According to a report released by the US Energy Information Administration on 17th, the average daily output of the seven major shale oil producing regions in the US will exceed 8 million barrels for the first time in 2008 and reach 8.032 million barrels. In January 2019, the average daily production of shale oil increases by 134,000 barrels to 8.166 million barrels.

Investors are worried that the pipeline problem that has limited oil production in the US has decreased. The continuous increase of oil production in the United States will significantly weaken the production reduction agreement reached by OPEC and Russia and other oil producers without OPEC earlier this month. Positive role in the aspect.

According to another source, since December, the average daily production of Russian crude oil has reached 11.42 million barrels, a record high.

David Marden, market analyst at online provider CMB Markets, said that major oil producers could talk about the importance of coordinating production cuts, but ultimately the decision is usually in their respective countries.

At the same time, recent economic growth in some of the world's major economies has shown signs of slowing down, enabling investors to rethink the prospects for global demand for crude oil.

Mizuho oil chief analyst Paul Sanki said OPEC had predicted that average daily demand for international crude oil would increase by about 1.3 million barrels next year. These data are likely to be overestimated.

Sanji said that some major institutions have recently lowered their expectations of global economic growth next year. The risk of a recession in some countries is increasing and the stock market fluctuates. If these factors ultimately contribute to the decline in global demand for crude oil next year, OPEC's production cuts will be meaningless.

Stephen Innes, Head of Asia-Pacific Trade for Forex and Commodity Dealers, Ouanda, said that the global oil price trend is basically determined by the reason for supply and demand when the continued increase in crude oil production is pessimistic for global economic growth. International oil prices will inevitably bear great pressure.

In addition, the latest international financial market has fluctuated drastically, and a large part of the funds poured into US dollar assets with some hedging capabilities. The US dollar index was still high and, to a certain extent, oil prices in US dollars were under pressure.

For the short-term development of international oil prices, the energy reinsurance fund, "reinvest", the capital companies, founder John Kildaf, believes that international oil prices could be around 42 dollars a barrel at 2017 low.

Goldman Sachs believes that the average price of London Brent oil in 2019 can still recover to around $ 70 a barrel, but it will not happen in the short term. Jeff Cory, Head of Commodity Research at Goldman Sachs, believes investors will not buy oil-based assets aggressively to evidence of fundamental changes at the root of the international crude oil market.

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