SunSirs: Energy, Review of the Refined Oil Market in 2019

1. Price Trend

In the first half of 2019, the refined oil market is stable, and it ups and downs in the second half of 2019.

2. Market Analysis

The first half of the year: from January to May, the trend of domestic gasoline and diesel was stable and upward. As of the end of May, the domestic gasoline price rose 1.79% to 6,616 RMB/ ton, while the diesel price rose 12.82% to 6,237 RMB/ ton. First of all, the overall trade relationship between China and the United States showed a gradual easing trend. In addition, the production reduction alliance led by Saudi Arabia actively promotes the production reduction. Crude oil production was affected, market supply was further compressed, oil prices continued to rise. Secondly, January and February coincided with holidays such as new year's day and Spring Festival. There was a strong demand for automobile travel, but the downstream purchase and replenishment operations were basically carried out as required. Thirdly, since the late February, outdoor projects such as infrastructure construction, spring ploughing and mining had been started, and the demand for diesel fuel had greatly increased. Therefore, the domestic product oil market had been stable and rising in the first half of the year, and the price performance of diesel market was far better than that of gasoline market.

The second half of the year: since late May, the domestic refined oil market has fluctuated broadly, showing a "W" trend as a whole. The market price of gasoline fell to the lowest level in the second half of the year in mid-June, down 8.92%, and rose to the highest level in the second half of the year in late September, up 8.33%. At the end of the year, it fell back to the level in late May, up only 0.36%. In the second half of the year, gasoline market prices fluctuated broadly, with an amplitude of less than 9%. At the same time, the market price of diesel oil fell to the lowest level in the second half of the year in mid-June, with a drop of 2.54%. In late September, it rose to the highest level in the second half of the year, with a rise of 7.47%. At the end of the year, it fell back to the level in late May, with a rise of only 2.27%. In the second half of the year, gasoline market prices fluctuated broadly, with an amplitude of less than 7.5%. As a whole, the price trend of gasoline and diesel market was consistent, and the fluctuation range of diesel market was smaller than that of gasoline market.

First of all, from late May to mid-June, the market demand for gasoline and diesel was still rising, the weather turned hot, the demand for automobile travel and gasoline increased, and the demand for diesel was also stable at a relatively high level. However, crude oil demand was expected to cool down, trade risks between China and the United States rose again, U.S. stocks plummet, risk assets such as bulk commodity crude oil were dragged down, and oil prices were down again. For a whole month, the international oil price had been in a sharp correction stage, and WTI crude oil fell to a low level of $51/ barrel in a year. Affected by this, the domestic market price of gasoline and diesel declined rapidly. Secondly, in the rising stage from the middle of June to the end of September, OPEC continued to release favorable news such as the extended production reduction, the attack on the oil tanker in the Gulf of Oman and the attack on Saudi oil facilities, which drove up the price of crude oil and boosted the price of domestic refined oil market. At the same time, this time stage is also the peak season of oil product market demand, as well as the mid-autumn national day long holiday stock demand. Domestic oil product prices were rising all the way. Finally, in the price correction stage from late September to the end of the year, international crude oil Saudi Arabia continued to release the signal of production reduction, superimposed on the phased results of Sino US trade negotiations, the future trade environment was expected to be improved, and oil prices continued to rise moderately. Since October, the domestic refined oil market has gradually entered the off-season of demand, and the operating rate of infrastructure, industry and mining projects has been declining. However, there is no holiday travel demand after the National Day holiday, and the demand for refined oil market is in a declining stage. However, the moderate rise of international oil price eases the decline of domestic refined oil market.

3. Market Forecast

The analyst of refined oil products of SunSirs believes that the demand for crude oil in 2020 is not optimistic, especially in the context of today's anti-globalization warming, future trade disputes may enter into normalization, and the demand for crude oil market will be restricted. At the same time, in 2019, the total refining and chemical production capacity of China reached 840 million tons, and large-scale refining and chemical integration projects continued to enter the market. It is expected that in 2020, the price focus of the refined oil market will fall steadily.

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