If the international oil price rises by 80% in 1 year, it is still difficult to stop and stabilize at 80 US dollars.

After Brent crude oil broke through the $80/barrel mark on May 18, the light crude oil futures price of June's June delivery reached US$72.83/barrel on May 22, 2014. The new high since November.

Oil, as the blood of modern industry, every time the price changes affect the nerves of the world economy.

After hitting a record high of $147/barrel in 2008, international oil prices fell to a low of $26 in early 2016. After a period of about a year and a half, the crude oil finally opened its uptrend channel in the second half of 2017. By the close of May 22, the price of Brent crude oil and WTI crude oil had risen from the lowest (non-settled price) in June 2017 to US$43.98 and US$43.34 per barrel, respectively, to US$79.57 and US$72.13 per barrel. Up to 80.9%, 66.4%.

The reporter found that since the birth of the modern oil industry, the international oil price has experienced three rounds of large-scale rise and fall. The current international oil price level can only be said to be still relatively low in 10 years.

Under this circumstance, can the current international oil price continue to rise, such as the general reopening of the rising cycle in the past three times? What level can it rise to?

Crude oil futures price trend since 2016 (unit: USD/barrel)

Oil once broke through the $80 mark

Affected by factors such as the increase in global oil demand and the reduction of production by OPEC (OPEC, OPEC), international oil prices have shown an upward trend since the second half of 2017.

In the second half of 2017 alone, Brent crude oil and WTI crude oil prices rose by 49.2% and 42.1% respectively.

Judging from the supporting factors behind the rise in oil prices, the steady rise in oil prices in July 2017 stemmed from the effect of OPEC's production cuts, and the US stock market rose further, providing more evidence of global destocking.

Brent oil prices stood at the important threshold of $50/barrel on July 25 last year. The WTI oil price was 2 months late, and it stood above $50 on September 20. This was due to the hurricane hit by the United States at the end of August, forcing many refineries to stop production, affecting oil demand, WTI crude oil market price was damaged, the lowest fell to 45.96 US dollars / barrel, while Brent oil prices maintained steady growth, at 52 USD/barrel floats up and down.

During the period from September to December 2017, OPEC and non-OPEC oil-producing countries extended the production cut-off period, and the important oil-producing countries such as Venezuela suffered economic crisis and other events, and once again, Brent and WTI oil prices soared.

Among them, Brent crude oil hit a $60 mark in October, while WTI rose to $60.42/barrel on December 29, the first time since June 23, 2015, it closed above the psychological level of $60/barrel. Brent crude oil price is 66.87 US dollars / barrel.

In 2018, international crude oil prices continued to rise. In January, Brent crude oil touched the $70/barrel barrier three times, and the overall fluctuation was in the range of 66-70 USD/barrel. The WTI oil price fluctuated around 60-66 USD/barrel.

However, in February, due to the increase in US crude oil production and inventories, oil prices fluctuated. At the end of the month, Brent crude oil and WTI crude oil fell by 5.6% and 6.3% respectively from the beginning of February to close at US$65.78 and US$61.64 per barrel.

The good news is that OPEC and non-OPEC organizations achieved a 139% reduction in production in February, providing confidence in the March market. As a result, international oil prices rose again: March Brent crude oil and WTI crude oil prices rose 10.1% and 6.5% respectively from the beginning of the month, and recovered the February decline. Brent oil prices hit the $70 mark four times.

Since then, from April to May, Syria has suffered from geopolitical incidents such as the joint military strikes by the United States, Britain and France, and the United States’ withdrawal from the Iranian nuclear agreement. As a result, concerns about the supply of crude oil have risen and international oil prices have risen.

Since April 10, Brent crude has stood above $70/barrel. At the end of April, Brent crude oil rose 11.13% from the beginning of the month, and WTI oil price rose 8.82%. Since then, WTI crude oil finally stood above $70/barrel on May 7.

As of the close of May 22, the Brent crude oil futures price for July delivery closed at $79.57 per barrel, and the New York oil price closed at $72.13 per barrel.

The price of oil is at the highest peak in history.

The price of oil is arrogant in the past year, which reminds people of the past rise in oil prices. What is the current level of oil prices in history? Is there a basis for continuing to open the up cycle?

Looking back at history, we are probably able to glimpse the ups and downs of oil prices.

The modern oil industry was born in 1859, after which the international oil price experienced a long period of interaction. The reporter of "Daily Economic News" found that by 2017, the international crude oil price had experienced three significant increases.

First, between 1973 and 1984, the international oil price rose from $3/barrel to $36.8/barrel. The main reason lies in: Before the establishment of OPEC in 1960, the production and demand of oil were mainly controlled by Western countries, and the oil price was at a low level of monopoly of 1.5~1.8 USD/barrel. The fourth Middle East war and the Iran-Iraq war broke out successively, igniting two oil crises in a row, and OPEC thus fully grasped the pricing power of oil, which caused oil prices to soar.

Second, from 2003 to 2008, WTI crude oil soared from a low of 25.24 US dollars per barrel in 2003, and reached a historical high of 147.27 US dollars per barrel in July 2008, an increase of 483%. This is because in the 21st century, with the rapid development of new economies such as China and India, the demand for crude oil has also shown a rapid growth trend, driving oil prices up.

Third, from 2009 to 2011, after the subprime mortgage crisis caused the oil price to drop to a low of 32 US dollars per barrel in 2008, under the support of the Federal Reserve's quantitative easing and OPEC's output reduction of 5 million barrels per day, the oil price re-established during this period. Above $100.

It is worth noting that between October 2011 and 2014, crude oil prices have remained at a high level of 80-110 USD/barrel.

From the current level of international oil prices, although both have stood above $70, there is still a long way to go from the historical peak of $147/barrel.

Zhong Jian, chief researcher of Jinlian Chuang Petroleum, said in an interview with the reporter of "Daily Economic News" that the current fundamental factors constitute that oil prices will continue to rise in the next three to five years, which means that between 2014 and 2017 The international oil price has fallen from around $100/barrel to $40 or even $20/barrel.

Yu Tingze, chief analyst of Lianxun Securities Chemical, told the reporter of "Daily Economic News" that from the fundamental point of view, this round of oil price increase is not a simple rebound, but a new round of long-term rising cycle. This year, Brent crude oil is expected to rise to 85-90 US dollars / barrel, and is stable in this range, the annual price center is about 75 US dollars / barrel. In the next two to three years, the world will return to the high oil price cycle.

Many experts interviewed by the "Daily Economic News" reporter also said that from the historical experience, supply and demand improved to support the oil price center to move up, and geopolitics will determine the rate of increase. At present, international oil prices still have the strength to rise.

Fundamental improvement to support oil price upwards

The improvement of supply and demand fundamentals has become the core driving force for the current round of oil price increases.

Zhao Chen, chief chemical analyst of Orient Securities, believes that inventory as a leading indicator has continued to decline since the second half of 2017, and US stocks have even fallen below a three-year low, reflecting the fundamental pattern of global supply and demand.

On May 16, the US Energy Information Administration released data showing that as of the week of May 11, US crude oil inventories decreased by 1.404 million barrels and gasoline inventories decreased by 3.79 million barrels.

On the other hand, the May International Oil Market Monthly Report released by the International Energy Agency showed that oil stocks in the OECD countries had fallen to 2.819 billion barrels in March, only a target of 2.818 billion barrels from the OPEC oil-producing countries. 1 million barrels.

Although the fundamentals of supply and demand have improved, the market has paid special attention to the OPEC production reduction conference to be held in June. Whether the extension of the production reduction agreement will play an important role in the market supply side. From the recent OPEC countries' attitudes, they can also roughly see their attitudes. OPEC Secretary-General recently said that although the global crude oil supply surplus will disappear before September, OPEC and its allies are preparing to extend the production reduction agreement to 2019.

Zhong Jian believes that once the decision to continue production cuts at the June meeting, the decline in inventory in the OECD countries will be inevitable, and global supply will likely turn tight.

In the US shale oil supply that can affect OPEC's production reduction effect, in Zhao Chen's view, the bottleneck of shale oil production has emerged. This year, the pipeline transportation is near full capacity, and it can only be converted into a higher-cost motor transportation. The bottleneck of transportation capacity will be more serious next year. At present, the United States is close to full employment, and its labor, oil service capacity and transportation capacity are constraining the growth of shale oil production.

More critically, Zhao Chen pointed out that the current oil price has broken through the cost ceiling of almost all shale oil blocks. In theory, the maximum capacity release capacity can be reflected this year. The marginal impact of future oil prices on production will be very high. Limited. With the structural shift of the shale oil cost center and the over-exploitation of the high-quality core area, the long-term increase in production elasticity is less optimistic, and the incremental limit is expected to be difficult to exceed 1.6 million barrels per day.

Under the support of strong demand for crude oil in emerging markets such as China and India, Zhao Chen believes that the global average annual growth rate will not decline. It is estimated that the annual demand growth will be about 1.4 million to 1.6 million barrels per day, and the output of traditional oil fields will fall by about 230. Ten thousand barrels per day, while the rate of increase in shale oil is about 1.6 million barrels per day. Even if OPEC increases production by 1 million barrels per day per year, there is still a gap of about 1.3 million barrels per day.

Zhao Chen said that with the passage of time, it is expected that global commercial inventories will start to decrease sharply in 2019. The tight supply and demand will cause oil prices to continue to rise, and the oil price center will rise to the next level. It is difficult to return to the past two years of 50~60 USD/barrel. The platform will be expected to hit $80/barrel this year.

In Zhong Jian's view, under the support of fundamentals, international oil prices will be expected to climb to $100/barrel in 2020.

Bank of America Merrill Lynch predicted in a report that international oil prices will rise to a high of $100/barrel in 2019. Blanche, head of commodities research at the bank, said: " Looking ahead to the next 18 months, we expect global crude oil supply and demand balance to tighten."

US exits Iran nuclear short-term push up oil prices

Geopolitics has always been an important driver of oil price volatility.

According to estimates by the Huatai Securities Research Institute, from October 1973 to March 1974, under the influence of the Fourth Middle East War, the Arab countries decided to impose an embargo on Western countries supporting Israel, which led to the first oil crisis. During the period, oil prices rose by about 210%. From December 1978 to April 1980, Iran’s domestic political turmoil led to its suspension of crude oil exports, triggering a second oil crisis, during which oil prices rose by about 125%.

The most recent geopolitical risk of concern is the US withdrawal from the Iranian nuclear agreement.

Since April 24, after French President Mark Long and Trump discussed the Iranian nuclear issue, the market worried that geopolitical risks will affect supply, and international oil prices will start to rise. According to Jin Lianchuang's calculations, this focus news event has caused oil prices to fluctuate by 4.7 dollars in more than two weeks.

On May 8, Trump announced his withdrawal from the Iranian nuclear agreement and imposed economic sanctions on Iran. Then, the international oil price fluctuated and the WTI oil price finally stood at the $70 mark.

The International Energy Agency recently stated that the resumption of sanctions against Iran may have an impact on market balance. At present, Iran exports about 2.5 million barrels of oil a day, making it the fifth largest oil exporter in the world.

However, in Zhong Jian's view, even if the United States sanctions Iran will affect its exports, the supply gap is not large. It is important to note that sanctions against Iran will cause market volatility in geopolitical tensions and market sentiment, which will push up international oil prices.

Zhong Jian believes that the short-term need to pay attention to is that after the end of May, the United States entered the peak season of self-driving tourism, which will drive gasoline consumption. Therefore, the recent release of inventory on Wednesday, the oil price is more reflected in the upward driving force.

Zhao Chen also believes that the establishment of the trend itself comes from the fundamentals, and the geopolitical conflicts at most affect the magnitude and rhythm of the rise.

Jin Lianchuang expects that the international oil price in the second quarter may have a sprint process, and WTI does not rule out the possibility of breaking through $75/barrel. After excluding other possible unexpected events, it is expected that the mainstream operating range of WTI in the second quarter will be 65~75 USD/barrel, and Brent is expected to run at 72~82 USD/barrel.