Recently, OPEC+ has made a decision to cut production, and the situation between Russia and Ukraine has intensified again, supporting a sharp rise in oil prices, and crude oil QDII funds have also risen.
On October 10, seven crude oil QDII funds, such as Huabao Oil and Gas LOF, Guangfa Oil LOF, Hua 'an Oil Fund LOF, collectively rose by the daily limit, with a total turnover of about 76 million yuan. On October 5, OPEC+ made a policy decision to reduce production by 2 million barrels per day, the largest production cut since agreeing to significantly reduce production since the start of the new coronavirus epidemic in 2020, and the supply of crude oil market was tight.
For the future trend of crude oil prices, relevant fund managers said that with OPEC+ more than expected production cuts, and the easing of global inflationary pressure after the oil price correction in the third quarter, the buffer space provided by the central bank's monetary policy, the short-term oil price upside risk is larger; Even if Iran releases supply, it may cause oil price fluctuations, but there is not much room for decline, and crude oil prices are currently very robust.
Seven crude oil QDII funds collective daily limit
Recently, OPEC+ made a decision to cut production, and the situation between Russia and Ukraine has intensified again, supporting oil prices to rise sharply. As of 15:00 on October 10, Brent crude oil futures have risen from $85 / barrel at the beginning of the month to $97 / barrel, an increase of more than 14%, WTI New York crude oil rose from $80 / barrel to $92 / barrel, an increase of about 15%, significantly ahead of other risk assets.
Crude oil QDII funds also rose, on October 10, 7 crude oil QDII funds collective limit.
For example, Huabao oil and gas LOF opened one-word daily limit, the day's turnover of 21.56 million yuan, during the National Day, Huabao oil and gas LOF index SPSIOP rose as high as 14.22%; Guangfa oil LOF also rose by the limit of one word, the day's turnover of 6.95 million yuan, for a long time, the fund has risen nearly 70% this year.
The OPEC+ production cut agreement may be the main factor driving the surge in international oil prices. On October 5, the OPEC+ Joint Ministerial Monitoring Committee proposed a production cut of 2 million barrels per day. The OPEC+ target is set for November and December supply, and ministers discussed the proposal at a meeting late on Oct. 5, making a final policy decision to cut output by 2 million barrels per day.
"This is the deepest cut OPEC+ has made since it agreed to a deep cut at the start of the coronavirus pandemic in 2020." Huabao oil and gas fund managers Zhou Jing and Yang Yang said that at the September meeting, OPEC+ had decided to cut production by 100,000 barrels per day, and the OPEC+ cut production by 2 million barrels per day again in October, making the originally tight crude oil market supply tighter; In addition, OPEC+ has sent a very clear signal: even if the economy is in recession, it can still cut production to support the price of oil.
Crude oil prices are very robust right now
The OPEC+ cuts reflect concerns among oil producers about a global economic slowdown.
Earlier this year, after the outbreak of the conflict between Russia and Ukraine, Brent crude oil once soared to more than $125 per barrel, but with the rapid tightening of monetary policy by many central banks to fight inflation, the economy suffered to some extent, combined with the strength of the dollar, oil prices have fallen sharply since the high of the year, at the end of September, once gave up all the gains since February, falling to $80 / barrel. With the introduction of OPEC+ production cuts, Brent crude oil futures jumped from $85 / barrel to $97 / barrel.
For the ups and downs of crude oil prices, Guangfa Dow Jones Oil Index QDII-LOF fund manager Ye Shuai said that since the third quarter of this year, worries about the global economic recession have led to a decline in crude oil demand expectations; At the same time, the Federal Reserve's aggressive interest rate hike suppressed risk assets, resulting in a certain degree of correction in the Dow Jones US oil index. "However, the impact of economic recession expectations on crude oil demand is long-term, and in the short term, with OPEC+ more than expected production cuts, and the easing of global inflation pressure after the oil price correction in the third quarter, the buffer space provided by the central bank's monetary policy, the short-term oil price upside risk is larger." Ye Shuai concluded.
In other words, the decline in crude oil demand expectations caused by the global recession can be hedged to a certain extent through the adjustment of OPEC+ production, thus keeping oil prices at a high level. Although OPEC+ production cuts run counter to the wishes of European and American countries to calm oil prices, the means of European and American countries to intervene in oil prices are limited, and the current upside risks in the international oil market are significantly greater than the downside risks.
In addition, the market is also focused on whether Iran will release oil supplies in the future. Zhou Jing and Yang Yang believe that in the short term, the possibility of Iran's supply release is getting smaller and smaller, even if the negotiations between Iran and the United States are successful, Iran's crude oil supply is about 1 million barrels per day. And this magnitude still can not make up for the U.S. strategic reserve after October stopped selling supply, not to mention the end of the year Russia by the EU sanctions had to reduce the supply of crude oil.
"As a result, crude oil prices are currently very robust (referring to the ability of the system to maintain a certain performance under the disturbance of uncertainty). Even if Iran releases supply, it may cause oil price fluctuations, but there is not much room for decline, the future needs to pay attention to whether high oil prices will affect its demand and lead to a counterbite and fall." Zhou Jing and Yang Yang concluded.
Buffett adds $350 million to Occidental Oil position
The strength of crude oil prices is also attracting the "stock god" Buffett continued to increase positions.
According to a regulatory filing published by the Securities and Exchange Commission on Sept. 28, Buffett's Berkshire Hathaway bought 5.99 million shares of Occidental Petroleum between Sept. 26 and 28, at a cost of about $352 million. Today, Buffett's stake in Occidental has increased to 20.9%.
Following the completion of these transactions, Berkshire Hathaway now owns about 194.4 million shares of Occidental Petroleum, with a total value of about $11.9 billion based on Wednesday's closing price of $61.41.
Zhou Jing and Yang Yang pointed out that for the upstream oil and gas sector in the United States, the market trading is more long-term logic, and Buffett is a long-term investor, so continue to add Western oil. In the long run, even if Iran releases its production capacity, the world's crude oil surplus is not much, and Biden has thought of all the options (from talking to big oil companies in the United States to sell storage to Saudi Arabia and finally to Iran), and finally may have to accept reality. As a result, U.S. oil and gas companies are likely to outperform oil prices in the future.
For ordinary investors, Ye Shuai suggested that international oil prices are expected to fluctuate around short-term central fluctuations, in this context, investors can consider participating in the crude oil market investment through grid trading. The so-called grid trading method is to determine the volatility range of the price of the fund within a certain time range, divide the volatility range into a number of equal parts on average, and then according to the price fluctuations, carry out high selling and low absorption band operation.
Zhou Jing and Yang Yang also said that it is recommended to look for opportunities in each correction of non-structural changes, but it is also necessary to do a good job of risk management and be alert to the risks caused by structural changes on the supply side caused by black swan events.
Source: Brokerage China
