Huitong.com November 21st - Monday (November 21) crude oil market, oil prices rose slightly. US oil traded around US$46.73/barrel, an increase of about 0.80%; oil oil traded around US$47.22/barrel, an increase of about 0.88%. With the approaching period of the official OPEC meeting at the end of November, the market is now turning its focus to the expectation that OPEC will reach a frozen production agreement. Last Friday (November 18), the Doha meeting of major oil-producing countries re-transmitted good news, boosting the market's confidence in OPEC's agreement to reduce production, and supporting oil prices to a certain extent. However, the situation of oversupply in the oil market still exists, and market trading still needs to be cautious.

Last Friday (November 18), US WTI crude oil December futures closed up 0.27 US dollars, or 0.59%, to 45.69 US dollars / barrel, when the week rose 6.66%, the first weekly increase in 4 weeks; Buren Special crude oil January futures closed up 0.37 US dollars, or 0.80%, to 46.86 US dollars / barrel, up 4.45% in the week, the first weekly increase in 5 weeks. A drag on the continued increase in OPEC production in October, oil prices fell to a three-month low last week. Subsequently, as the oil-producing countries continued to disclose to the market the optimistic attitude towards the production reduction agreement, the oil price withstood the pressure of the dollar's surge and rebounded strongly.

(The picture above shows the K-line chart of the January contract price of US NYMEX crude oil futures)

(The picture above shows the K-line chart of the ICE Brent crude oil futures contract price)

According to FX678, officials from major oil-producing countries in the world met in Doha, Qatar, on Friday (November 18) to discuss the details of the production reduction agreement and some optimistic information, which enhanced the market's expectation of OPEC's production reduction agreement. .

Saudi Energy Minister Falih said on Friday that the Doha oil talks are going well.

Russian Energy Minister Novak said on Friday that the meeting with Saudi oil captain Falih was constructive. Russia’s position with OPEC is getting closer and closer. Frozen production is one of the options. Russia is ready to limit production and is ready to join the OPEC agreement. Make sure that OPEC will reach an agreement at the November 30 meeting. The United States is a key factor in OPEC's ability to adhere to the agreement. If the major oil producing countries do not increase production, this will help the oil market to achieve a balance between supply and demand.

Iran said on Friday that it is very optimistic about the agreement reached by OPEC.

Iraqi Oil Minister Aru Abi said on Friday that Iraq and OPEC oil-producing countries have made some progress in eliminating differences between them. He is now optimistic about the OPEC production reduction agreement.

The Algerian Energy Minister said on Friday that OPEC may freeze crude oil production at a daily level of 32.5 million barrels. The OPEC is preparing for the talks in Vienna and will not go back to the results of the Algerian meeting.

These news revealed OPEC's optimism about reaching a production reduction agreement, which enhanced the market's expectation of OPEC's production reduction agreement. In addition, at the Doha meeting, OPEC proposed to limit Iran's oil production to around 3.92 million barrels per day. However, Iran has not yet responded to this.

From the fundamentals of supply and demand, the latest data released by the US oil service company Baker Hughes (BA ker Hughes) showed that the US oil rig increased by 19 in the week of November 18, the largest single-week increase since July 2015, the total to 471 The mouth refreshed a nine-month high, also the 22nd week of the past 24 weeks. Huitong Finance analysts believe that from the recent changes in the number of US oil drilling, the number of US drilling platforms is generally recovering, indicating that US crude oil production may become active.

From the perspective of market linkage, a stronger US dollar will usually put pressure on international oil prices denominated in US dollars. Last week, about eight Fed officials made speeches, including several 2016 ticket committees, 2017 ticket committee and Federal Reserve Chairman Yellen. Their speeches all hinted that the Fed may raise interest rates in December, allowing the market to add 12 to the Fed. Interest rate hike reached a comprehensive consensus. Thus, increase the momentum of the dollar's rise.

In addition, as the market expects US President-elect Trump to take office, it will increase fiscal expenditures, increase US inflation, and make US Treasury yields higher, and the US dollar will strengthen. Huitong Finance's Yihuitong market software showed that the US dollar index rose 3% to 14-year high last week, and US Treasury yields are also at this year's high. Industry analysts expect that this market impact is expected to continue to ferment. In the coming week, US Treasury yields will continue to rise and the US dollar will continue to strengthen.

However, Jim Calon, fixed-income portfolio manager at Morgan Stanley Investment ManaGE Men, said that given the weak economy in China, the Brexit referendum and other uncertainties, the agency believes that the Fed may only raise interest rates once this year, or It is December. Caron also said that market sentiment is unpredictable. If market sentiment is positive, then US Treasury yields will grow rapidly, even better than expected, and the dollar will also strengthen. If we think that the US will still be in a mode of economic stagflation, then US Treasury yields will go down and the US dollar will weaken.

From a geo-relationship, according to FX678 reported on Saturday (November 19), Iran’s pipeline to export oil from the Kirkuk oil field to Turkey was suspended due to power shortages. The current daily export volume of the pipeline is 100,000 barrels, and in October it was 133,000 barrels. The oil field transports Iranian oil, including the Kurdish region, through the Ceyhan port adjacent to the Mediterranean Sea in Turkey. The Kurdish autonomous region government and Baghdad reached a settlement in August this year before resuming exports. Huitong financial analysts believe that the supply of crude oil is interrupted, or to some extent, alleviating the oversupply pressure on the oil market.

From the perspective of positions, the latest weekly report of the US Commodity Futures Trading Commission (CFTC) showed that as of November 15th, hedge funds and other fund managers reduced their net long position in US crude oil futures and options by 1,213 hands to 276,326 contracts.

From the market expectation, Royal Bank of Canada (RBC) expects that OPEC will finally reach a production reduction agreement at the formal meeting in Vienna in November, in order to curb crude oil output and stabilize the oil market.

According to a recent survey released by Bloomberg on Friday, crude oil traders and analysts turned to look at oil prices next week for the first time in more than 10 weeks. Of the 41 gold traders and analysts surveyed, 20 were bullish (49%), 9 were bearish (22%), and 12 were flat (29%).

However, according to Huitong.com, there are still many market analysts who believe that OPEC has a low probability of actually reaching a production reduction agreement. Michael Cohen, head of energy commodities research at Barclays, said that major oil producers seem to be working hard to reach a production cut. However, he did not expect much from the final agreement to reduce production. It is expected that the possible situation is that OPEC has reached a superficial agreement, but this agreement does not change the current situation of oversupply in the oil market.

AgainKituff analyst John Kilduff, the world's major oil-producing countries will only vigorously advocate production cuts, but no substantive action has been taken. He believes that the market will eventually see through the essence of OPEC will only "release the gun." And, oil prices will once again fall into chaos.

Market analyst Weafer expects that OPEC will not actually implement a production cut, and the final result may be that crude oil production is frozen at a high level. The biggest concern in the market today is the US shale oil producer. If the oil price is higher than 50 US dollars / barrel, it may lead to a comeback of US shale oil producers, thus increasing the pressure on the oil market to supply excess. He also expects oil prices to fall back to $40/barrel in 2017, rather than above $50/barrel or $60/barrel.

In addition, it is worth noting that this week's US Thanksgiving Day holiday, the original Baker Hughes oil drilling report originally scheduled to be released at 02:00 Beijing time Saturday (November 26), ahead of schedule to Beijing time this Thursday ( November 24) announced at 02:00, investors need to pay close attention.

Huitong Finance Yihuitong market software shows that at 10:23 Beijing time, WTI crude oil reported 46.81 US dollars / barrel; Brent crude oil reported 47.14 US dollars / barrel.