The hottest OPEC production reduction is difficult

OPEC production reduction is difficult to stop the decline in oil prices

[one week market review]

the global financial crisis continues to spread, and demand concerns depress the international crude oil price. This week, the NYMEX crude oil index increased by 7.21 U.S. dollars, while the plastic industry moved towards the high end, reaching $65.63, down nearly 10% in a week, a 16 month low. By this week, the international crude oil price had fallen for four consecutive weeks, with a cumulative decline of more than 40%. Economic concerns led to the decline in crude oil prices, and the sharp reduction in OPEC production also failed to achieve the effect of boosting oil prices. On Friday, OPEC Vienna meeting announced a reduction of 1.5 million barrels per day from November 1, but the market response was flat, and the nemex crude oil index fell by more than $3 on the same day. Technically, $70 failed to form a strong support for oil prices, and the moving average showed a divergent downward trend, with an obvious downward trend

[financial crisis]

the financial crisis is undoubtedly the leading factor leading to the decline in crude oil prices, and the government's market rescue measures have become the market's lifesaving straw. However, at present, the aid actions of various countries and institutions have little effect. The euro zone's 2trillion aid funds are like a stone in the sea, and the United States is expected to boost the market with more than 12000billion rescue funds, which is only limited to preventing major financial institutions from bankruptcy. The financial crisis began to spread to the economic field gradually, and the signs of economic recession were first revealed in Europe. According to media reports, British consumption was significantly depressed, and the retail and catering industry was greatly impacted. Bank of England officials said that "no one can avoid the reality that the British economy is facing recession, because all signs point to economic recession." Although the signs of recession in other European countries are not as obvious as those in Britain, the credit flow in the eurozone is blocked, and the impact on the production sector will gradually appear. The U.S. economic data are mixed, but the decline in investors' assets may be the biggest blow to the United States. As a barometer of the economy, the stock market crash may be a precursor to the storm

[OPEC production reduction]

as an OPEC country with crude oil as its pillar industry, it has become a direct victim of the sharp fall in international oil prices. At the Vienna meeting on October 24, OPEC announced that its daily production would be reduced by 1.5 million barrels from November 1 to curb the continued decline of oil prices. However, under the panic that the global economic downturn in the market will affect energy demand, the effect of production reduction is limited, and at least in the short term, it is difficult to have a substantial effect on boosting market confidence. OPEC's production reduction was expected by the market, and the production reduction is also within the range of psychological acceptance of the market

in the current global economic environment, we believe that OPEC production reduction is meaningless. On the position of reducing production, there are differences among OPEC member states. Iran, Venezuela and other countries have firm views on reducing production, but Saudi Arabia does not support the reduction, so the implementation of the decision to reduce production is still questionable. As previously said, crude oil is the main economic source of OPEC countries. Once the reduction can not raise the oil price, in order to maintain economic income, In the process of global economic recession, increasing crude oil production to increase economic income may become the helpless move of OPEC countries

[strong dollar]

Wall Street is the fuse of the financial crisis, which hopes to bring help to everyone. However, the dollar continues to strengthen, and the financial crisis seems to become the main supporting factor of the dollar. Although in the long run, there is a lack of elements to support the strengthening of the US dollar, it is the common policy goal of all countries to maintain the stability of the value of major international settlement currencies in the process of coping with the global financial crisis. At present, in the international monetary market, the US dollar and the Japanese yen are generally supported and both are stronger. Under the long-term expansionary monetary policy, the two countries pursue the "zero interest rate" policy. Under the ultra-low interest rate level, there is limited room for the two countries to reduce interest rates. On the contrary, the interest rates of other major international currencies are relatively high. The market expects that interest rate cuts will become the main policy means for these countries to stimulate the economy. With the economy of Western Europe increasingly approaching recession under the pressure of the financial crisis, after the global joint interest rate reduction on October 8, some European Central Bank officials recently hinted that they might continue to reduce interest rates. Switzerland first announced the interest rate reduction and said that it was expected to further reduce the benchmark interest rate in the next six months. From the perspective of monetary value, the dollar will continue to strengthen in the short term

[U.S. inventory]

the latest data released by the U.S. Energy Agency showed that as of the week of October 17, U.S. commercial crude oil inventory increased by 3.182 million barrels to 311.38 million barrels, and gasoline inventory increased by 2.799 million barrels to 196.497 million barrels. In that week, the daily import of crude oil in the United States increased by about 239000 barrels, the daily average import of gasoline decreased by about 400000 barrels, and the daily average output decreased by 200000 barrels. So far, U.S. crude oil and gasoline inventories have increased for four consecutive weeks, and insufficient consumption is the main factor for the increase in inventories. The decrease in oil consumption demand reflects that the financial crisis has gradually spread to the consumption field, and it is expected that the demand in the United States will continue to slow down in the later period

[fund position]

the position data released by CFTC this week showed that the speculative funds in the NYMEX crude oil market continued to decrease. As of the week of October 14, the speculative long position of the fund decreased by 1654 to 164118, and the short position increased by 3935 to 166017, changing from a net long position to a net short position. The amount of market speculative funds reached the lowest level since February 2007. Crude oil prices continued to fall, speculation risks intensified, and it was difficult to meet the fund's hedging needs. The crude oil market lacked financial support

[later research and judgment]

the global economic downturn is bound to affect energy demand. The impact of the financial crisis on the economy is gradually emerging, and market demand concerns have completely reduced the supporting effect of OPEC production cuts on crude oil prices; The US dollar will continue to remain strong, and funds will flee the crude oil market. The above factors will jointly suppress the international crude oil price, and the short-term oil price will continue to fall

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