On September 4th, Shanghai crude oil futures prices plummeted by 4.5%. During the same period, the price of crude oil futures in New York fell below $70 per barrel.
As a result, the A-share energy sector saw a significant increase in its decline, with the Wind secondary industry energy sector index falling 2.25%, becoming the sector with the largest decline on the day. Among them, CNOOC fell by 5.51%, PetroChina fell by 5.28%, Sinopec fell by 1.20%, and ST Haiyue, Intercontinental Oil and Gas and other companies experienced the largest declines.
In the past two months, international oil prices have fallen by over 16%. The consumption of major oil consuming countries around the world has slowed down, and the expected increase in production and supply has become an important reason for the sharp decline in crude oil prices. The important driving force behind today's global crude oil crash is the potential agreement on the suspension of Libyan oil production and exports. The market expects that once OPEC and non OPEC oil producing countries (OPEC+) start to increase their oil production as planned from October, this will further imbalance the already loose supply-demand balance, and the center of gravity of oil prices may shift further in the later stage.
Oil prices fall below $70 per barrel
On September 4th, the prices of energy such as crude oil and coal fell sharply, with the Shanghai crude oil futures main contract index quoting around 522.8 yuan/barrel, a decrease of 4.49%, while the coke futures main contract fell 4.6% and the coking coal futures main contract fell 5.2%.
During the same period, international oil prices continued to decline at low levels, with WTI crude oil futures contracts remaining below $70 per barrel, while Brent crude oil futures continued to be around $73 per barrel. Previously, on the evening of September 3rd, New York crude oil futures fell more than 4%, falling below $70 per barrel, setting the lowest closing price since December last year and wiping out all gains this year.
As a result, the A-share energy sector saw a significant increase in its decline, with the Wind secondary industry energy sector index falling 2.25%, becoming the sector with the largest decline on the day. Among them, CNOOC fell by 5.51%, PetroChina fell by 5.28%, Sinopec fell by 1.20%, and ST Haiyue, Intercontinental Oil and Gas and other companies experienced the largest declines.
According to data, since crude oil reached nearly $90 per barrel in early July, international oil prices have fallen by over 16% in the past two months. As a result, the relatively large S&P oil and gas ETF (159518) in China fell 4.54% on September 4th, and its annual decline has reached 3.34%. The previously popular Saudi ETF (159329) fell more than 1% on September 4th, wiping out all gains this year.
Currently, the international Brent oil price has fallen by 5% this year, while the New York crude oil price has fallen by 2.24% and the Shanghai crude oil price index has fallen by 4.5%. After experiencing a sharp decline for 4 days, the domestic A-share market still saw a year-on-year increase of 19.59% for PetroChina, 21.82% for Sinopec, 29.87% for CNOOC, and 33.18% for China Shenhua.
The center of gravity of oil prices may further shift downwards
The dispute over the suspension of oil production and exports in Libya is expected to reach an agreement, becoming an important driving force that has recently overwhelmed crude oil prices. In early August, the Shalala oil field in Libya was shut down due to protests, resulting in a reduction of crude oil production by approximately 200000 barrels per day. Recently, there have been "strong" signs that various political factions in Libya are approaching an agreement, leading to market expectations of further imbalances in the supply and demand of crude oil.
Currently, the decline in global crude oil inventories is 70% less than the same period last year. Last year, it was 210 barrels per day, while this year it is only 600000 barrels per day. Brian Leisen, a capital markets analyst at Royal Bank of Canada, believes in a research report that even without considering the oversupply that will occur in 2025, the outlook for oil prices is bearish.
Data shows that consumption in major oil consuming countries around the world has slowed down. In the upcoming peak season of gasoline consumption in the United States, gasoline prices have been hovering around $3.50, a decrease of over 7% compared to the same period last year; In the first seven months of this year, China imported a total of 318 million tons of crude oil, a year-on-year decrease of 2.4%. Among them, the import volume in July was only 42.337 million tons, a year-on-year decrease of 3%.
OPEC and the International Energy Agency have successively lowered their forecasts for the future growth rate of global crude oil demand. OPEC predicts in its monthly report that global oil demand will increase by 2.11 million barrels per day in 2024, lower than last month's expected growth of 2.25 million barrels per day. This is the first time OPEC has lowered its forecast for this year's oil demand growth since it was released in July 2023. The International Energy Agency also stated that the growth rate of oil demand in 2024 is expected to reach 970000 barrels per day, which is consistent with the July forecast and only half of OPEC's expectations. The expected growth rate of oil demand in 2025 is expected to reach 950000 barrels per day, slightly lower than the previously predicted 980000 barrels per day.
The supply-demand imbalance in the crude oil market has become the core contradiction in crude oil prices. In the past two years, a large part of the reason why international crude oil prices have resisted decline is due to OPEC+'s voluntary production cuts. As OPEC+gradually withdraws from voluntary production cuts in the fourth quarter, the market expects an additional 180000 barrels per day for OPEC+starting from October.
Dong Chao, an analyst at Shenyin Wanguo Futures, believes that once OPEC+starts to increase oil production as planned from October, it will further imbalance the already loose supply-demand balance, and the center of gravity of oil prices may further shift downwards in the later stage, especially if WTI oil prices fail to maintain support levels above $70 per barrel.
Goldman Sachs analyst Yulia Grigsby pointed out in a report that the current decline in oil prices is "relatively large compared to fundamental news," and the downward trend may be amplified by algorithmic trading strategies that track trends. However, from the perspective of supply and demand pattern, OPEC countries will increase production, while non OPEC oil producing countries' supply growth will be stronger, and there is a risk of further price decline.