The price of oil will remain high and the spread between the two places is expected to further narrow

Recently, the price of crude oil continued to strengthen under the influence of various bullish factors. London's crude oil prices frequently hit a new high since 2008, and the New York crude oil price also approached the highest point in 2011. At present, oil prices oscillate as investors take profit. For the development of the market, I believe that oil prices will remain high, and the spread between the two places is expected to further narrow.

As of Friday (March 16) closing, New York crude oil rallied following the surrounding rally. The April contract closed higher by $1.95 to $107.06 per barrel; Intercontinental Exchange (ICE) May Brent Crude oil ** rose 3.22 US dollars to 125.82 US dollars / barrel.

First of all, the Middle East situation is difficult to calm in the short term Civil unrest in Syria continued. Although the constitutional reform package was passed by the referendum, the opposition did not agree with it. Western political forces have always demanded that the Bashar government step down. The situation in Iran is the key to the impact on oil prices. The West and Israel are negotiating whether to use force against Iran’s nuclear facilities. The call for Iraq’s use of force is getting louder and louder, and Iran is frequently conducting military exercises to cope with it. The throat of crude oil exports - the Strait of Hormuz. The United States has strengthened its economic sanctions against Iran. The EU announced that it imposed an oil embargo on Iran from July this year, and Iran has stopped exporting oil to Britain and France in advance. Under pressure from the West, China, India and Japan plan to reduce oil imports from Iran by about 10%. The three countries account for about 45% of Iran’s oil exports. In the face of the severe embargo situation, it is still not clear how Iran will respond. If Iran takes extreme measures to strangle the Strait of Hormuz, it will have a severe impact on the crude oil market. It is very likely that oil prices will approach historical highs. of. Because as many as 17 million barrels of oil pass through the Strait of Hormuz every day, accounting for about 40% of the world's total exports, such a large amount of crude oil can not be delivered to users, even if it is a short time, it will also cause great impact on the crude oil market. .

Second, despite the twists and turns of the road, the world economy is still on its way to recovery, and moderately loose monetary policies with ever-improving economic data will support oil prices. In 2012, the debt crisis that plagued Europe turned a corner. On February 21, the euro zone finance ministers reached an agreement on Greece’s second round of 130 billion euros bailout, thus avoiding the possibility of Greece defaulting in March. The U.S. economic data also continued to improve. In January 2012, the U.S. non-agricultural sector’s unemployment rate fell by 0.2 percentage points from the previous month to 8.3%, the lowest since February 2009. The situation of a downturn in employment has been completely eliminated, showing that under the background of economic recovery, the employment situation has been better improved.

Third, in the long run, the spread of crude oil between Europe and the United States is expected to narrow. Starting from 2011, the London crude oil price began to enter a premium relative to the New York crude oil futures price. Under normal circumstances, the New York crude oil futures price should exceed the London crude oil futures price by US$1-2. The reason for this change is mainly in the Middle East, including Libya. The war and the Iranian nuclear issue have been strained. These countries’ supply of crude oil to Europe far exceeds that of the United States, making London’s crude oil futures price more sensitive to the political situation. In addition, due to the restrictions of the trading system, although the New York crude oil can be physically delivered, the cost of arbitrage between the two places in Europe and the United States is very high, resulting in the London crude oil price was higher than the New York crude oil price of 26.87 US dollars in September last year. This situation changed from the second half of last year. It is reported that from Cushing, the delivery point for crude oil in New York, there will be a crude oil pipeline through the Gulf of Mexico. This will enable Cushing's crude oil to be directly transported to refineries to save costs. Crude oil price arbitrage between Europe and the United States became possible. At the same time, the improvement of US economic data also directly boosted the price of New York crude oil, making it rise faster than the London crude oil price, resulting in a narrower spread. Therefore, in the long run, with the gradual opening up of the arbitrage conditions in the two places, the spread of crude oil futures prices between the two places is expected to return to a normal level.