Since 2021, with the recovery of the global economy and rising inflation expectations, crude oil prices have become the focus of market attention. Recently, crude oil prices have fluctuated greatly due to the Suez Canal being unable to navigate. In order to help investors understand the current market situation, on March 30, Saxo Bank Group teamed up with Futures Daily to hold the 2021 National Bank Saxo Bank Online Real Offer Competition, inviting many guests from all walks of life in the market to discuss the current crude oil investment. Conduct an in-depth review of hot issues.
The reason why crude oil prices continue to rise this year is, in the opinion of market participants, mainly affected by inflation expectations. It is understood that under the impact of the epidemic in 2020, the U.S. economy will be under greater pressure. Under such circumstances, in order to support the U.S. economy, the government has introduced a number of policies and released a large amount of water.
This year, with the global economy likely to recover, the market’s inflation expectations are also rising. Crude oil, the king of commodities, is expected to continue to rise in price under such a market environment. Especially recently, the rise in U.S. bond yields means that a large amount of money has flowed out of U.S. bonds. In addition, although inflation has not yet risen, inflation expectations are high. Gan Canrong, a private equity fund manager and guest lecturer at CME Group, said that funds flowing out of the U.S. bond market will naturally increase in large amounts when commodity asset prices are relatively low. Allocate to anti-inflation assets including crude oil.
In this regard, Lin Yuxing, a futures lecturer at the School of International Banking and Finance of Shanghai University of Finance and Economics and a distinguished lecturer at the School of Futures Business, put forward different views. He believes that according to the Fisher equation, under the current velocity of money circulation, a substantial increase in the amount of money will not cause a “skyrocketing” in commodity prices.
“As for the sharp rise in prices after the fourth quarter of last year, it is essentially because the epidemic caused a certain time lag between production and demand. As the epidemic improves, demand recovers quickly, and naturally There is a shortage of supply. It is precisely because of this that after the Spring Festival, the market experienced a decline,” he said.
Gan Canrong, a private equity fund manager and guest lecturer at CME Group, believes that the recent rise in U.S. bond yields means that many U.S. bond holders are selling U.S. debt. Considering that the current market is in inflationary expectations, funds coming out of U.S. debt will naturally flow to relatively anti-inflation assets such as crude oil. Therefore, it is still a high probability that crude oil prices will rise in the future.
However, Gan Canrong also discovered that the Federal Reserve recently intends to control inflation by suppressing commodity prices. For example, recently, the chairman of the Federal Reserve publicly stated that some asset prices were too high, which led to a sharp decline in oil prices that day.
As for the fundamentals of crude oil, experts attending the meeting generally believed that in the short term, we still need to focus on supply-side changes. After all, although the global economy has shown a recovery trend in recent times, crude oil The improvement on the demand side is not obvious.
Among them, the OPEC+ meeting in early April, according to Li Wenfeng, an analyst at Saxo Bank Group, needs to be focused on. After all, in the current market environment, there is great uncertainty about Saudi Arabia’s future output.
In Gan Canrong’s view, although Saudi Arabia and Russia still expect higher oil prices, the United States, in order to further control inflation, is unlikely to be willing to continue rising oil prices. In addition, after last year, most high-cost oil-producing companies in the United States have been eliminated. The current oil production cost of American oil companies is generally around US$35/barrel. Under such circumstances, suppressing inflation expectations by suppressing commodity prices may be a good choice.
In fact, since Saudi Aramco went public, Saudi Arabia’s fiscal revenue is no longer completely dependent on crude oil prices. On the contrary, for other oil-producing countries in the Middle East, when the oil price has been below 110 US dollars per barrel for three consecutive years, their fiscal deficit problems are likely to be more serious. Under such circumstances, Lin Yuxing believes that there is still great uncertainty in the recent OPEC+ meeting. Considering that next Monday, domestic trading will not be possible due to the Tomb Sweeping Day holiday, he believes that when there are insufficient tools, it is best to stay put and wait until everything becomes clear before considering allocation. </p
