In 2019, the international crude oil market surged, many factors affected the oil market, and the oil price also showed ups and downs. On the whole, the first half of the year showed unilateral rise. WTI crude oil rose from about $45/ barrel at the beginning of the year to about $66 in the first ten days of April. Subsequently, with the reduction of risk factors at the geographical edge and the expected cooling of crude oil demand caused by the upgrading of Sino US trade war, the oil price dropped rapidly. The price of WTI crude oil fell to about $50 by the end of June. In the second half of the year, the price of WTI crude oil continued to fluctuate. By the end of the year, China US trade negotiations reached the first stage agreement. Global trade risks were reduced. In addition, OPEC + extended the production reduction agreement, the oil market environment was improved, and the oil price was in a warm and rising channel.

First of all, in the first half of the year, the oil market rose unilaterally and then fell sharply. There are two main factors driving the oil price upward. On one hand, OPEC continues to reduce production and the implementation rate of production reduction is high. There is not too much pressure on the supply side of crude oil, and the crude oil inventory data has been favorable to the oil price. On the other hand, Iran's nuclear crisis has not been lifted, the United States has imposed sanctions on Iran, and Iran's crude oil production has continued to decline, affecting part of the crude oil supply. Specifically, in terms of the overall environment, the Sino US negotiations continued to advance, showing a gradual trend of relaxation as a whole. In addition, the production reduction alliance led by Saudi Arabia actively promoted the production reduction. Saudi Arabia contributed the highest production reduction of OPEC+ member countries, superimposed the political situation of Venezuela, Libya and other countries, affected the crude oil production, further compressed the market supply, and continued to increase the oil price Last year, the United States lifted the exemption of sanctions against Iran, and the growing tensions between the United States and Iran led to the highest oil price in the first half of the year. The highest crude oil price in the United States was $66.60/ barrel, and Brent was $75.60/ barrel.

With the oil price at a high level, a higher risk premium is bound to make the oil market hard to escape a fall during the period of market easing. Then, since late April, trump has continued to urge OPEC to increase production to hedge against the supply reduction brought by Iran sanctions, and the market began to panic. The oil price continued to decline, and OPEC did increase production before that, so the oil price continued to bottom out. Subsequently, with the influence of geopolitical risks and the increase of crude oil inventory in the United States, crude oil entered a narrow range of shocks. However, by May, many institutions were not optimistic about the future economic prospects. The demand for crude oil was expected to cool down. In addition, the situation in the United States and Iraq was cooling down, Sino-U.S. trade risks rose again, U.S. stocks plummeted, risk assets such as bulk commodity crude oil were dragged down, and oil prices were once again dragged down. In the first half of June, the price of oil has been hovering at the level of $51/ barrel. On the whole, in the first half of 2019, OPEC+ production reduction and geographical tension continued to drive oil prices up one after another. However, the global economy is weak, the demand outlook is not expected to be ideal, coupled with the geographical premium back, the high oil price fell.

In the second half of the year, there were frequent "black swan" events in the crude oil market. The oil price continued to fluctuate widely, and the oil producing countries continued to release favorable comments on extending and reducing production, which made the bottom of the oil price stable. Oil prices were boosted again by short-term gains such as the attack on the Gulf of Oman oil tanker, a call from Chinese and US leaders to rekindle hopes for trade peace talks, and concerns about the war caused by Iran's shooting down of us drones. However, the cooling of demand outlook is still the key factor that puzzles oil prices, especially the forecast of institutions, which makes the oil market repeatedly. Generally speaking, the oil prices in the third quarter are in the process of mixed ups and downs.

In the fourth quarter of 2019, the overall oil price has entered the recovery period. Saudi Aramco's listing at the end of the year is approaching. In order to create a good oil price environment, Saudi Arabia continues to release the signal of production reduction, and superimposed with the phased results of Sino US trade negotiations, the future trade environment is expected to be improved, and the oil price continues to rise moderately. In addition, after the OPEC+ production reduction Alliance announced to increase and reduce production by 500,000 barrels/ day in the first quarter of 2020 after the meeting on December 5-6, the oil price continued to approach the highest level in April. Throughout the year, excluding the high stage in April, the main fluctuation range of WTI crude oil futures is $50-60/ barrel, while Brent crude oil futures is $59-69/ barrel.

In the future, SunSirs believes that in 2020, oil prices still need to pay attention to two aspects: on one hand, the implementation of OPEC+ production reduction; on the other hand, the actual decline in crude oil demand brought about by the global economic slowdown. From the perspective of supply-demand relationship, it is expected that the overall supply risk of crude oil supply and demand will increase and the demand growth will slow down in 2020.

In terms of supply, the increase of global oil supply in 2020 mainly comes from shale oil in the United States. IEA forecasts that non-OPEC oil production will accelerate by 2.3 million barrels per day in 2020 to 67.13 million barrels per day, with the US accounting for 54% (1.2 million barrels per day) of growth. Shale oil in the United States is still a risk point of oil market supply, especially on the basis of OPEC+ continuous production reduction, the supply of crude oil will only increase or not decrease, which will bring great negative effects to the oil market.

In terms of demand, in the earlier period of tense trade situation between China and the United States, both OPEC and the International Monetary Fund made predictions about the demand outlook in 2020. The U.S. Department of energy predicted that the growth of global oil demand in 2019 would be only 750,000 barrels/ day, but it is expected that the growth of oil demand in 2020 would be 1.37 million barrels/ day. The International Energy Agency (IEA) predicts that the global oil demand will increase by 1.24 million barrels/ day in 2020. From the data point of view, the demand for crude oil in 2020 should be cautiously optimistic, especially in the context of today's anti-globalization warming, we should continue to pay attention to the variables in the global trade environment, and the future trade disputes may be normalized, which will restrict the demand for crude oil.

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