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SunSirs: The Oil Sector Led by Crude Oil Led the Energy Market to Decline in March

April 07 2020 13:30:46     SunSirs (Selena)

In March, the domestic energy industry continued to decline. The oil industry chain is a disaster area of the energy industry. Affected by the irrational decline of international crude oil, the market never recovered. In terms of coal, it is slightly better than the oil sector, boosted by favorable factors of large-scale resumption of production in China, stable demand for steel plant raw materials, and good residual temperature profit at the end of heating in the north. Although it is in a weak position, the decline is still under control. With the resumption of downstream construction, the demand of natural gas sector has increased, and the price has rebounded, which can be regarded as the repair market of over 20% drop in the first two months of 2020.

Data: according to the price monitoring of SunSirs, in the list of commodity prices in March 2020, there was one kind of commodity rising on a month on month basis in the energy sector, with LNG (7.42%) rising. There were 15 kinds of commodities falling on a month on month basis, with 13 kinds of commodities falling by more than 5%, accounting for 81.3% of the number of commodities monitored in the sector; the top three products falling were WTI crude oil (-57.34%), Brent crude oil (-48.93%) and LPG (-26.85%). The average rise and fall of this month was -19.01%.

The oil sector led by crude oil led the energy market to decline

According to the data monitored by SunSirs, WTI crude oil fell by 57.34% in March, Brent crude oil fell by nearly 50%, and the oil price collapse is naturally one of the "black swan" events in 2020. There are two main reasons: the sharp reduction of global demand caused by the epidemic, and the supply risk caused by the "price war" of increasing production in Russia and Saudi Arabia.

According to SunSirs, at present, global demand is still the decisive factor restricting the oil price, and there is no improvement trend in the development of the epidemic in the short term, especially in Europe and the United States. At the same time, the region is also the region with the largest demand for crude oil before the epidemic. The decline in demand is still continuing, and it is difficult for the oil price to rise too much, even though Russia and Saudi Arabia have become a new consistent reduction The production agreement may also be hard to make up for the share of the current decline in demand. In addition, the current market crude oil storage has been approaching saturation. It is reported that the global crude oil storage capacity will be exhausted after six weeks, and the global excess state will be more and more serious. In a comprehensive consideration, the medium and long-term oil price will still be running at a low level.

Cost driven, prices of refined oil fell sharply

According to the price monitoring of SunSirs, the market price of refined oil fell sharply in March. The gasoline price at the end of the month was 4,975 RMB/ ton, down 19.16% from 6,154 RMB/ ton at the beginning of the month; the diesel price at the end of the month was 6,059 RMB/ ton, down 15.47% from 5,119 RMB/ ton at the beginning of the month. High inventory and load reduction have become the main theme of the refinery.

According to the price adjustment of gasoline and diesel, at 24:00 on March 17, the domestic price of gasoline and diesel decreased by 1,015 RMB/ ton and 975 RMB/ ton respectively, the biggest drop in ten years, and reached the bottom price of oil product price adjustment. Although the maximum retail price of refined oil would not be adjusted any more, it was predicted that the reduction rate would reach 1,200 RMB/ ton at 24:00 on March 31. The refining cost reduced. The refined oil market had room for reduction. The market had a strong wait-and-see mood and fewer transactions. With the resumption of construction and production of the enterprise, the refinery was shut down and started in succession in the early stage. The average starting load of the unit was 61.84%, with a month on month increase of 9.15%, and the supply of steam and diesel increased. In March, the market price of domestic refined oil continued to decrease.

In the future, according to SunSirs, the overseas epidemic situation is on the rise, and there is no sign of production reduction in Saudi Arabia and Russia. The international crude oil market is under pressure. At the same time, with the resumption of domestic refineries, the supply of refined oil increases, and the market price of refined oil is under the double pressure of cost and supply. It is expected that the price of refined oil will run at a low level in the short term.

 

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