Russia announces reduction in crude oil production!
Russia plans to cut production, international oil prices rise significantly
According to Russian media reports, on February 10, local time, Russian Deputy Prime Minister Novak said that Russia plans to reduce crude oil production by 500,000 barrels per day in March. He said that the West’s practice of setting price ceilings on Russian petroleum products may lead to international supply shortages of petroleum and related products.
According to the Russian TASS news agency, Kremlin spokesman Peskov said that day that Russia had consulted with several OPEC+ members before deciding to voluntarily cut crude oil production in March.
In response to international sanctions, Russia has repeatedly hinted that it may cut crude oil production. Coupled with the EU’s announcement of new price caps on seaborne Russian petroleum products (such as diesel and fuel oil) starting from February 5, this move may reignite turmoil in the oil market.
On the 10th local time, two representatives of OPEC+ member states revealed that they do not plan to take any action to make up for Russia’s crude oil production cuts. They also said OPEC+ would maintain supply despite Russia’s plan to cut crude oil production by about 500,000 barrels per day.
Russia plans to set the price of its Urals crude oil at $20 a barrel below Brent for tax purposes, three industry sources said on Friday, as the country’s oil revenue fell sharply in January. The government has been debating how to calculate taxable oil prices in Russia because of the lack of a reliable pricing mechanism due to the EU oil ban. The price difference between Urals crude oil and Brent oil widened from US$24/barrel in November to US$30/barrel in December, which is still much larger than the single-digit price difference before 2022. Another proposal would set the spread at $25/barrel, before gradually narrowing to $20/barrel, sources said.
Affected by news of Russia’s production cuts, international oil prices rose significantly on Friday. As of the close of the day, the main contract of WTI crude oil futures rose by US$1.66/barrel and closed at US$79.72/barrel, an increase of 2.13%; the main contract of Brent crude oil futures rose by US$1.89/barrel and closed at US$86.39/barrel, an increase of 2.24 %. This week, the main WTI crude oil futures contract has a weekly increase of 8.6%, and the main Brent crude oil futures contract has a weekly increase of 8.1%.
Russian media: Medvedev commented on Biden’s possible re-election, “His carelessness may trigger three wars”
According to reports from Russian media such as Sputnik on the 10th, Medvedev, Vice Chairman of the Russian Security Council, commented on the social platform Telegram that US President Biden may be nominated and seek re-election as president. He said that Biden’s carelessness may trigger a third World War.
According to the report, Medvedev said: “Old Biden seems to be seeking a second presidential term. In the first term, it can be found that: he confused names, names, dates, and got lost in his office; he put secret documents in the garage of a private residence; spent over $100 billion on a collapsing country (Ukraine) that the average American had no idea about, yet blamed all of America’s economic problems on a Russian conspiracy; due to his insouciance, he Could trigger World War III.”
Russian Satellite News Agency mentioned that Biden has not yet officially announced his participation in the 2024 US election. But according to the Associated Press report on the 6th of this month, although Biden insists that he plans to seek re-election in 2024, most Democrats now believe that one term is enough for him. A new poll from the Center for Public Affairs Research shows that only 37% of Democrats want Biden to seek re-election, down from 52% in the weeks before last year’s midterm elections.
Century-old investment bank lost more than 50 billion last year
On February 9, local time, the latest quarterly financial report released by the century-old investment bank Credit Suisse Group (“Credit Suisse”) was once again shocking.
The latest financial report shows that Credit Suisse suffered its largest annual loss in 2022 since the 2008 financial crisis.
In the fourth quarter of last year, Credit Suisse’s net loss expanded to 1.39 billion Swiss francs (approximately 11.9 billion Hong Kong dollars, 10.266 billion yuan) quarter-on-quarter, marking the fifth consecutive quarter of losses. The full-year net loss expanded significantly to 7.29 billion Swiss francs (approximately HK$62.2 billion, 53.842 billion yuan), and revenue fell 34% to 14.92 billion Swiss francs (approximately HK$126.65 billion, 110.195 billion yuan).
After the financial report was released, Credit Suisse closed down more than 15% as of the close of U.S. stocks on February 9.
On the eve of the release of the U.S. CPI in January, the Biden administration adjusts the weights of sub-items such as used cars and housing rents
A few days before the release of January CPI data, on February 10, the U.S. Bureau of Labor Statistics released the latest weights of the Consumer Price Index (CPI) components. The agency will lower the weight of used cars and slightly increase the weight of residential (mainly owner-equivalent rent).
Analyze and recognize��The soybean supply and demand pattern has not yet changed, and the CBOT soybean response was relatively dull after the report was released. “Meierya Futures oil and oil analyst Zhang Cuiping told the Futures Daily reporter that the current export situation of U.S. soybeans is favorable, and institutions maintain unanimous expectations for a high harvest of Brazilian soybeans. However, the initial harvest progress is slightly slower, and the threat of drought in Argentina has not yet been eliminated. CBOT soybean prices have The weather in South America has been reflected, and the short-term momentum to continue to push up is limited, but there is no basis for a sharp correction in the early stage of production in South America.
On February 10, supply and demand data released by MPOB showed that Malaysia’s palm oil inventory at the end of January was 2.27 million tons, an increase of 3.26% from the previous month; production was 1.38 million tons, a decrease of 14.73% from the previous month; exports were 1.14 million tons, a decrease of 22.96% . Production and export data were basically in line with expectations, but imports far exceeded expectations, causing final inventories to rise to the highest level in the same period in nearly four years, and the report was bearish.
In this regard, Wang Congying, an analyst at CITIC Futures, said that compared with market estimates, the data in this report showed that the output was in line with market expectations, the export volume was lower than market expectations, the import volume was much higher than market expectations, and the ending inventory was higher than market expectations. Although Malaysia’s domestic consumption has increased to a certain extent, due to the increase in imports and weak export data, Malaysia’s ending inventory removal was slow, and the ending inventory data was higher than market expectations, so the report was bearish.
Zhang Cuiping said that Malaysian palm oil production continued its production reduction cycle in January. Compared with the lower production reduction rate from November to December last year, the decline in Malaysian palm oil production in January was greater than the average for the same period in the past 16 years. However, exports during the same period recorded the third lowest level in the past 16 years. Although Malaysian palm oil exports and production rebounded to a certain extent in early February, overall exports and destocking were weak, and the industry’s support for palm oil futures prices was limited. The trend of Malaysian palm oil was slightly weaker.
“Palm oil plays a core role in oil and fat. Currently, both supply and demand are weak. The seasonal downturn in output may provide support to palm oil prices. However, as palm oil stocks in major consumer countries India and China are at a relatively high level during the same period, export slowdown has made the market The increase is limited, and it is difficult for futures prices to get rid of the current range oscillation situation.” Yu Lanlan, oil and oil analyst at CCB Futures, said.
In Indonesia, Indonesia has recently suspended export license approval, and the market is worried that this may lead to a sharp increase in prices. Wang Congying analyzed that from the actual situation, even if Indonesian exports are artificially controlled, it is still difficult to change the weak export situation. First, although Indonesian inventories are low, Malaysian inventories continue to grow and are generally at a high level. It is difficult for Indonesia to unilaterally raise export prices. Secondly, as the world’s largest importer of oils and fats, India’s current oil and fat inventories are relatively high. This is mainly due to the large increase in India’s oil and fat imports last year and the relative lack of consumption, which has led to the rapid accumulation of oil and fat inventories. Thirdly, India’s oil and fat import profits are skewed. Under the dual constraints of import capacity and import willingness, India’s oil and fat imports are expected to fall seasonally. China’s current oil and fat import profits are negative. Although there are expectations for post-epidemic consumption recovery, the high inventory of palm oil is also a fact. China’s palm oil imports are also expected to remain relatively low in the first half of 2023. Finally, even if Indonesia reduces production in 2023 and the demand for firewood increases, it will take time to materialize. Therefore, the expectation of Indonesian export restrictions has not changed the current weak operating pattern of oil and fat. In addition, from a macro perspective, the market’s expectations for the Fed’s interest rate cut in the middle of the year have been revised again, which is also negative for oil to a certain extent.
In Yu Lanlan’s view, the biggest contradiction on the supply side is the increase in soybean production in the new season, especially whether Brazil’s production can be realized as scheduled, and whether palm oil production in the main producing areas is in line with expectations. From the demand side, China’s epidemic prevention and control policies have been optimized and adjusted. As consumption recovers, import demand from the U.S. biofuel industry, which is in strong demand, will increase. Indonesia will increase the biodiesel blending rate from 30% to 35% starting in February. Compared with the loosening of supply expectations, the pace and influence of global demand increase are relatively slow, and the oil and fat market is still dominated by weak sentiment in the short term.
“Overall, the current oil and fat market is intertwined with long and short factors and maintains an oscillatory trend. It is recommended to closely track Indonesian palm oil policy dynamics and oil and fat production. There are still major challenges and uncertainties in the future, which may make the price trend complicated.” Yu Lanlan said .
Zhang Cuiping believes that as the pre-holiday epidemic peak has passed, passenger transport, tourism, and consumption during the Spring Festival have recovered significantly compared with 2022 and are approaching the levels of 2019. The market has high expectations for the recovery of oil demand after the holiday. However, market trading enthusiasm has not yet increased. The weak reality hit again. In the first week after the holiday, rapeseed oil broke through the market, and soybean oil and palm oil once again tested the lower edge of the range, repeating the situation in late December 2022 and early January 2023. This week, the market is waiting for the monthly report on the cost side. Oils and fats have rebounded based on the lower edge of the range. However, with the release of the MPOB report, there is no positive kinetic energy support on the industrial side. Oils and fats are under pressure again, and there is a high probability that the weak trend will continue in the short term.
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