□Guangda Futures Research Institute Gao Hua The U.S. gradually coming out of a consumption lull and rising tensions in the Middle East have strengthened international oil prices significantly since February. As of 20:12 Beijing time on the 20th, NYMEX crude oil futures had closed with six consecutive gains, rising to $105.80 per barrel, the highest level in nearly nine months, akin to the high-frequency test points for the 2011 college entrance examination; European Brent front-month crude oil rose to as high as $121.15 per barrel, showing a strong trend approaching its peak since the financial crisis ——$127.02 per barrel. Although crude oil may continue its strength in the short term, the rapid rise in energy costs is gradually weakening the momentum of global economic recovery. If we exclude sudden factors' stimulation, the sustainability of the sharp rise in oil prices is not strong. Speculative funds are optimistic about the international oil market After the energy relationship between Europe and Iran became increasingly tense, speculative funds strongly favored the future of international oil prices. According to data released by the Commodity Futures Trading Commission (CFTC) last Friday, as of last Tuesday, hedge funds and other large speculators increased their net long positions in NYMEX crude oil futures options by 28,180 contracts to 233,889 contracts, reaching the highest level since May 2011. The net long position of non-commercial holdings indicates that the market is optimistic about the trend of international oil prices. The Dollar Index encountered strong resistance at around 79.7 points last week, re-entering a weak phase in the short term, which boosted international oil prices to some extent because a weaker dollar makes dollar-denominated international oil prices cheaper. After the European Central Bank launched the Long-Term Refinancing Operation (LTRO) in December last year, the risk of escalating Eurozone debt crises began to gradually dissipate, allowing European market oil prices to break free from consolidation trends and continue upward. The recent clarification of solutions to Greece's debt problems has improved market sentiment, enhancing the enthusiasm of capital entering the market to a certain extent. The Federal Reserve's reaffirmation of maintaining low interest rate policies unchanged acted as a catalyst for accelerating the rise in oil prices. Supply-demand differences widen price gaps Based on this year's weather conditions, the demand difference caused by the weather difference between Europe and America is an important factor affecting the price gap between the two regions. The relatively higher winter temperatures in the U.S. compared to historical averages led to lower heating oil consumption levels. Data from the American Petroleum Institute (API) showed that due to the decline in heating oil demand, U.S. January crude oil demand fell sharply by 5.7% year-on-year, to 18.026 million barrels per day. In contrast, Europe experienced a harsh winter, resulting in relatively robust crude oil consumption demands, causing Brent crude oil and NYMEX crude oil trends to diverge significantly from late January to early February, widening the price gap to $19.02 per barrel. Demand differences are the main reason for the widening price gap, but supply factors cannot be overlooked. Through the relentless efforts of several presidents, the U.S.'s dependence on crude oil from the Middle East has greatly diminished. Issues such as Syria and Iran have only a very small impact on the domestic U.S. energy market supply, whereas Europe has increased its reliance on the Middle East due to declining production from the North Sea oil fields. There are significant differences in the sensitivity of U.S. and European energy supplies to the Middle East situation, which is also an important reason for the divergence in oil price trends between the two regions. Seasonal patterns support oil price increases Global crude oil consumption is mainly concentrated in the Northern Hemisphere, especially in North America. The structure feature of U.S. oil consumption being primarily gasoline-based causes fluctuations in international oil prices according to changes in gasoline consumption during peak and off-peak seasons. From the seasonal patterns of international oil prices over the past 25 years, mid-October to the end of February the following year is mostly a period of oil price adjustment, as during this period, the U.S., as the world's largest energy consumer, experiences a winter lull in gasoline consumption. After the adjustment ends, corresponding to the gradual recovery of U.S. gasoline consumption from its trough, oil prices usually show steady increases in March and April. With the U.S. unemployment rate entering a phase of rapid decline at high levels, the market generally expects the U.S. automobile driving peak to boost oil prices, making this year's seasonal increase in oil prices start earlier than in previous years. Although the direct impact of the Iranian issue on international oil prices should not be underestimated, the real driver behind the rise in oil prices is still the supply-demand relationship. A decrease in Iran’s exports to Europe is offset by an increase in exports to Asia. Before its normal crude oil production and transportation are disrupted, the actual impact on the supply-demand balance of the international energy market is not significant. From a war perspective, as OPEC's second-largest oil producer, Iran's influence on the supply-demand balance of the world energy market far exceeds Libya. Considering its control over the Strait of Hormuz, the geopolitical risk premium for oil prices caused by the Iranian situation will far exceed that of the Libyan war. Share to: Welcome to post comments I want to comment