The hottest three pillars accelerate the bottom of

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The "three pillars" oil price accelerated to the bottom

the "three pillars" oil price accelerated to the bottom

December 09, 2014

[China paint information] with the United States, Russia, Saudi Arabia and other parties' game on oil prices has entered a white heat, the international oil price fell again last Friday, and the crude oil futures price delivered on the New York Mercantile Exchange in January next year fell by 1.45% to $65.84 a barrel, breaking the new low since July 2009

insiders pointed out that Saudi Arabia, which has a strong economic foundation, is happy to see the oil price weaken temporarily on the premise of expanding its market share, intending to suppress the shale oil of the United States. At the same time, the suppression of the Russian economy is not harmful to it; The United States also hopes to see Russia's economy weak, and its shale oil industry will not collapse quickly with the fall of oil prices; Russia is rich in various resources and does not rely solely on oil. In this "three pillars" relative balance situation, if there is no obvious "weakness" of one party to change the balance relationship, the oil price may accelerate the bottom in the near future

the formation of the three pillars

analysts believe that the recent continuous decline in crude oil prices has been condensed into a "Three Kingdoms kill", with the protagonists being Saudi Arabia, which has the largest share in the organization of Petroleum Exporting Countries (OPEC), Russia and the United States. In 2013, the above three accounted for 13.1%, 12.9% and 10.8% of the world's crude oil production respectively. At present, the three parties hold different positions. Although they all said that the crude oil related policies are by no means aimed at other countries, in fact, the smell of gunpowder is obvious

for Saudi Arabia and the Gulf oil producing countries it represents, the current decline in oil prices is still within its bearing range. What they are more worried about is the loss of market share. At present, it is undoubtedly the competition from American shale oil that may lead to a sharp decline in its market share. Therefore, after OPEC chose not to reduce production at the end of November, Saudi Arabia announced on December 4 that it would provide discounts on crude oil prices to American and Asian customers in January 2015. Market participants interpret this as that Saudi Arabia has upgraded the price war in order to compete for market share, and the oil price may be further under pressure

the latest commentary of the financial times pointed out that Saudi Arabia and OPEC undoubtedly hope to have both high oil prices and high production, but in fact, in addition to the period from 2000 to 2008 before the financial crisis, driven by China and other emerging economies, the global oil demand soared, and OPEC can enjoy the benefits of pushing the oil price from $20 to $140 a barrel while slightly increasing production, Most of the time, it is difficult to achieve the "double high" of oil price and production. In this context, OPEC needs to choose between the two. Historically, choosing to reduce production may not benefit

in the 1970s, the production of North Sea oil fields in Britain increased rapidly, putting downward pressure on international oil prices. In order to maintain high oil prices, OPEC took the initiative to reduce production. By 1985, OPEC's oil production had fallen from 30million barrels per day, which improved the core market competitiveness of enterprises during the peak period, to 15.87 million barrels per day. The international oil price has indeed remained at a high level, but due to the sudden decline in production, OPEC's economy has suffered a heavy blow, and other oil producing countries have benefited from it. In December 1985, OPEC was forced to announce a new increase in production to regain market share. The international oil price then fell by more than 67% in a short period of four months. After this sharp fall, Saudi Arabia and other OPEC core countries were very cautious in choosing to reduce production and protect prices, not to mention that at present, compared with that at that time, shale oil from the United States may occupy its lost share after production reduction faster

the decline in oil prices is expected to be difficult to stop

analysts pointed out that if Saudi Arabia and OPEC are strong enough, they will not reduce production at the end of November and allow oil prices to continue to weaken for a period of time, the crude oil related industries in the United States and Russia will encounter big trouble. OPEC will then calmly reduce production, and oil prices will also rebound. But at present, OPEC's influence has become weaker and weaker, and it also makes full use of the R & D resources of the parent company. Therefore, if the relative balance of the three is not changed, the oil price will be difficult to recover

for the United States, the latest data from the U.S. energy information administration showed that in August this year, the amount of crude oil imported by the United States from OPEC accounted for only about 40% of the total crude oil imports, which was 2.9 million barrels per day, the lowest since May 1985. It also predicted that even if the oil price fell to about $40 a barrel, the Bakken oil field in North Dakota, one of the major shale oil producing areas in the United States, would remain profitable

Bloomberg energy analysts pointed out that because the U.S. shale oil industry involves many resource basins and operators, the experiment to determine a series of characteristics of materials under tensile load after the oil price may fall to a very low level will force the U.S. shale oil production to stop. It can be said that the United States still has a lot of room for tolerance, and during this period, the Russian economy may suffer greater impact, which will be what the United States is happy to see, so it does not want to promote the rapid recovery of oil prices

for Russia, although its economy has suffered a heavy setback due to the decline in oil prices, Russia still has a lot of cooperation with many countries in the field of energy, and Russia is rich in resources. In addition to crude oil, there are many other resource exports to rely on, and the economy is by no means able to collapse overnight. Therefore, Russia is also trying to "sit back" to further hit the U.S. financial system, and crude oil competitors such as Saudi Arabia have also been hit

UBS group predicts in its latest research report that next year, under the influence of factors such as the U.S. economic recovery and the normalization of monetary policy, the possibility of China's economic slowdown still exists, and the shale oil investment cycle, the global crude oil market will still show a pattern of relative excess supply, and the oil price will continue to show a downward trend at least in the first half of the year

Reuters stressed that in the short term, the rich countries in OPEC are expected to try to deal with their internal differences and difficultly promote the "crowding out competitor strategy" of not reducing production and ensuring market share, which will continue to lower oil prices. The US Treasury will increase its support and technology research and development for the shale oil industry

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