During the Spring Festival holiday, international oil prices continued to rise, Brent oil prices once approached the 65 US dollars / barrel mark. Under such circumstances, some market participants inferred that oil prices have entered a new "supercycle" and triggered heated discussions in the industry.
Jeff Currie, head of commodities research at Goldman Sachs, has shouted that copper and crude oil are already in a commodity "supercycle" and that "the story has just begun".
"long crude oil, and insist on holding steady, crude oil still has a lot of room for upside. I don't know if the oil price will go back to $150 a barrel. We're talking about a macro repricing where everything has to be repriced. " Currie said in an interview.
In addition, an OPEC representative who declined to be named yesterday said that Iran will attend a meeting of the OPEC + Consultative Committee next month. The representative said that although Iran is not a member of the OPEC + Joint Ministerial Monitoring Committee (JMMC), it will still attend the meeting of the committee on March 3. OPEC and its allies will meet the next day to discuss April production. It is not uncommon for non-JMMC members to participate in the meeting. Libya, Venezuela and other OPEC member states have also participated in the meeting before. But Iran's attendance is a bit unusual, and the country is engaged in a diplomatic tussle that could eventually lift sanctions on Iran's crude oil exports. If a large amount of crude oil from the country enters the global market, it will complicate OPEC's efforts to eliminate the market surplus.
At 7: 00 this morning, Brent crude oil futures opened lower and rose to 63.1 US dollars per barrel, up 0.3%. WTI crude oil futures opened down 0.6% at $59 a barrel.
Is the commodity "supercycle" coming?
When it comes to whether oil prices will enter the "supercycle", we first need to know about another hot topic in the industry: whether commodities have entered the "supercycle"?
In theory, the "supercycle" of commodities refers to whether commodity prices have risen unusually for a long time and have risen in a long and wide range. In the past two years, global monetary easing has led to increased demand for commodities and soaring prices of iron ore and natural gas. For example, in 2020, the vast majority of commodity prices showed a "V" trend, falling first and then rising, and commodity prices strengthened across the board in the second half of last year, especially since the fourth quarter. By 2021, supported by the expectation of global economic recovery and the loose policies of the world's major central banks, the prices of metals, chemicals and agricultural products have risen further and hit new highs in recent years one after another.
Given the growing signs that the inflation cycle is coming, some market participants believe that commodities have entered a "supercycle" and are expected to continue. At present, there are many positive factors in the market. Consumption expectations are likely to pick up as global stimulus policies continue to intensify and the epidemic shows signs of falling from its highs. In addition, the peak consumption season after spring is approaching, and market participants believe that this commodity bull market will continue for some time.
Recently, Morgan quantitative analyst Morgan Chase quantitative analyst Marco Kranovich said that a new commodities "supercycle" has begun, and this will be the fifth "supercycle" in the past 100 years.
Li Wanying, a senior energy analyst at Donghai Futures Research Institute, told reporters that the reason why commodities have entered the "supercycle" in the market recently has something to do with the recent return of the king of "Dr. Copper" and "Big Oil". After all, commodities not only have commodity attributes, but also have strong financial attributes, which are generally regarded as leading indicators of economic development.
It is precisely because of this, the recent strong performance of the non-ferrous and energy plate as a whole, the market mood is collectively excited. As for the logic behind the strong performance of the non-ferrous and energetic plate, according to Zhong Meiyan, research director of Everbright, there is no lack of hype about the concepts of weak dollar cycle, reinventory cycle, superimposed carbon peak, carbon neutralization, new energy and so on.
Zhong Meiyan believes that there are two core factors driving the recent rise in commodity prices: one is the relationship between commodities and interest rates, and the other is the mismatch between supply and demand brought about by the elasticity of commodity supply under the expectation of strong economic recovery. "under the expectation of a strong economic recovery, the smaller the elasticity of commodity supply, the greater the persistence of the mismatch between supply and demand, and the greater the increase. However, the performance of crude oil is different from that of non-ferrous oil, and the sustainability of non-ferrous oil is better than that of crude oil. The oil market also needs to pay attention to geopolitical factors, such as the US attitude towards Iran sanctions. " She said.
As for the relationship between commodities and interest rates, in Zhong Meiyan's view, the upward price of oil affects the pace of monetary policy by pushing up inflation, driving interest rates up, thereby constraining financial markets. She believes that the price of crude oil is highly correlated with changes in Treasury yields, both in US and Chinese Treasuries, especially during the period of rapid rise in crude oil prices. Historically, 10-year Treasury yields have converged better with oil prices after the 2008 subprime crisis.
Taking the recent 4.07 basis point rise in the yield on the US 10-year benchmark Treasury note as an example, in Ms Li's view, the signs reflect market expectations of rising inflation. From a macro point of view, the minutes of the Fed's January FOMC monetary policy meeting believed that the extent of the US economic recovery was "far from" the target, and reiterated that the ultra-loose monetary environment would continue to be maintained in the future. The economic easing measures introduced by various countries in response to the epidemic have created a good atmosphere of optimism for commodity markets. In addition, the vaccine has been vaccinated one after another, the temperature in the northern hemisphere has warmed up, and the market has good expectations for the effectiveness of the vaccine.
Does crude oil enter the "supercycle"? There are disputes in the industry.
At present, there are some differences in the market as to whether crude oil will usher in a "supercycle".
During the Spring Festival, crude oil production in the United States and Russia fell sharply due to extremely cold weather, and international oil prices rose further. Not only the futures price of US oil once exceeded 61 US dollars per barrel, but the Brent oil price was once close to 65 US dollars per barrel. Affected by this, domestic refined oil prices completed "three consecutive increases" during the year.
"if you add in several increases a year ago, the current price adjustment of domestic oil products has achieved 'seven consecutive increases' and is even expected to achieve 'eight consecutive increases'." Zhong Meiyan said.
The reason for such an idea is mainly because oil prices have risen continuously against the backdrop of more-than-expected contraction of supply and recovery of demand, and considering that macro factors such as loose liquidity in the global market have also been superimposed behind it, Zhong Meiyan believes that before the second quarter, crude oil prices are still easy to rise but difficult to fall, and the upward trend is still continuing.
"you know, at present, the price of crude oil has returned to its pre-epidemic level, and from the point of view of the impact of the price, it still lies in the split between the two ends of supply and demand." Zhong Meiyan said: on the one hand, in the post-epidemic period, the vaccination rate has increased, new confirmed cases overseas have reached an inflection point, expectations of global economic recovery have been gradually realized, and there is definite room for repair in crude oil demand. At present, overseas institutions estimate the growth of global crude oil demand in 2021 at the level of about 5.7 million barrels per day, especially the economic forecast for the first half of the year is more optimistic. On the other hand, the supply-side OPEC production reduction combined with the extremely cold weather in the United States, leading to a phased supply gap to further expand. The number of oil production reductions will be adjusted to 7.2 million barrels per day from January 2021, and if Saudi Arabia undertakes to reduce production by an additional 1 million barrels in February and March, the total production reduction of OPEC+ will still be estimated at 8.2 million barrels per day. The extreme cold weather in the southern United States last week brought a sharp loss of US shale oil production, and estimates for the loss of oil production continued to be raised as companies and traders assessed the situation. At present, it is estimated that US crude oil production may lose 32 million barrels until early March, or 2.1 million barrels per day over a half-month period. Before Blizzard, US crude oil production was 11 million b / d, a loss of nearly 20 per cent.
It is worth noting that not only the (IMF) of the International Monetary Fund forecasts that the average world oil price this year is 65 US dollars per barrel, which may reach 80 US dollars per barrel at the highest, but Goldman Sachs and JPMorgan Chase also predict that oil prices will have a chance to exceed 100 US dollars per barrel this year.
However, some well-known analysts in the industry believe that the conclusion that crude oil has entered the "supercycle" is a bit hasty, especially under the background that the COVID-19 epidemic has not been effectively controlled and the global economy is still fighting for recovery. there is still a lot of uncertainty in the market. Although vaccination has begun around the world, the effectiveness of the vaccine is in doubt. The epidemic in Europe and the United States is still serious, and it will not be considered that the crude oil consumer market has basically recovered until the epidemic is completely under control. In addition, the recent upward rise in oil prices is the result of both macro expectations and short-term factors, while the actual impact of geopolitics and US blizzard on oil prices is relatively limited, the phased shortage of supply may gradually ease within a few weeks, and high oil prices have also triggered speculation about whether OPEC will firmly reduce production.
Li Wanying believes that it is too early to judge that the crude oil market has entered a "supercycle" at the current time point. In her view, the recovery in 2021 is indeed the main tone for the crude oil market. Since the first quarter, with the launch of vaccines, under the background of increased production reduction of OPEC and geopolitical tensions in the Middle East, the upward speed of international oil prices has accelerated and the price gap structure has been repaired obviously. At present, crude oil consumption tends to improve. In fact, since the outbreak of the epidemic last year, under the active and passive production reduction of various countries, supply change has become the dominant logic of the short-term oil market. However, the U. S. blizzard focused on magnifying the degree of phased tightening on the supply side.
In fact, the global crude oil balance sheet reflects the general trend of going out of storage. U.S. crude oil stocks were 461.757 million barrels in the week ended February 12, down 7.26 million barrels from the previous week and falling for four consecutive weeks, according to the U.S. Energy Information Administration. Crude oil inventories are now 4.26% higher than the same period last year and unchanged from the same period in the past five years. In Li Wanying's view, under optimistic conditions, the oil market may achieve a balance between supply and demand by the end of the second quarter. Therefore, the overall performance of Brent oil prices for the whole year is expected to be significantly better than that of 2020. "however, it will take time to verify whether the novel coronavirus epidemic can be brought under control." She said.
As for the future, Li Wanying said that after oil prices objectively covered the cost of shale oil production, it would reignite concerns about supply recovery, while OPEC+, led by Saudi Arabia and Russia, would hold a meeting in early March, advising investors to keep an eye on the progress of the meeting.
Zhong Meiyan believes that investors also need to pay attention to the pace of destocking of crude oil stocks, the progress of negotiations between the United States and Iran, the timing of the landing of the US fiscal stimulus and the trend of Treasury yields.
