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Accelerate the construction of an oil and gas price system that reflects the supply and demand of the Asian market

Accelerate the construction of an oil and gas price system that reflects the supply and demand of the Asian market

(Summary description)

Accelerate the construction of an oil and gas price system that reflects the supply and demand of the Asian market

(Summary description)

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  On June 8, the second "cloud conference" series seminar of Dishui Lake financial Bay, sponsored by Shanghai oil and gas trading center, was held. With the theme of "analysis of oil and gas market under the current complex situation", the meeting discussed the trend of international oil and gas market under the conflict between Russia and Ukraine and its impact on China.
  By our reporter Liling
  The reporter learned at the meeting that the geopolitical situation caused by the conflict between Russia and Ukraine will dominate the trend of the international oil and gas market this year. The European Union has imposed an oil export embargo on Russia, and the geopolitical premium will be difficult to eliminate in the short term. It is estimated that China's annual oil import expenditure may increase by more than US $100billion under the background that the annual international oil price continues to be high and the average price of Brent crude oil exceeds US $100 / barrel. In this regard, industry experts call on China to accelerate the construction of an oil and gas price system that reflects the market supply and demand in Asia.
  Supply side uncertainty supports oil price rise
  According to daijiaquan, director of the petroleum market Institute of China Petroleum Economics and Technology Research Institute, the current geopolitical conflict has greatly increased the uncertainty of the world's oil supply side, and the global oil supply and demand pattern is undergoing profound adjustment, forming an important support for the international oil price.
  On June 2, the EU officially adopted the sixth round of sanctions against Russia. According to the sanctions plan, the EU will gradually stop member states from purchasing Russian crude oil by sea within the next six months, and stop importing Russian refined oil products by sea within the next eight months. It is expected that by the end of this year, the EU's oil imports from Russia will decrease by more than 90%.
  In fact, since the conflict between Russia and Ukraine, Russian oil production has decreased significantly. According to EIA data, Russia's oil (including crude oil, condensate and NGLS) production in April this year decreased by 960000 barrels per day month on month to 10.4 million barrels per day, the lowest since November 2020. Among them, crude oil production decreased by 900000 barrels per day month on month to 9.1 million barrels per day. EIA predicts that from May to July, Russia's crude oil production decreased by 700000 barrels per day, 610000 barrels per day and 570000 barrels per day respectively, and will drop to 7.2 million barrels per day from July.
  "On the whole, the current high international oil prices are mainly due to the sharp decline in Russian crude oil production, resulting in a decline in global oil supply." Daijiaquan said, "on the other hand, although opec+ is gradually reducing the scale of production reduction, its production increase target has not been achieved, and the gap with the production target is growing. In April this year, the gap reached more than 2.6 million barrels per day. The market is also doubting the production increase potential and supply capacity of opec+. This is why after opec+ announced its production increase, the international oil price rose instead of falling."
  "In the medium and long term, oil demand will continue to grow, while upstream investment is constrained, and the probability of supply-demand imbalance increases." Dai Jiaquan further said.
  China's crude oil import volume decreases and prices rise
  According to market data, both WTI crude oil futures and Brent crude oil futures have exceeded the $120 / barrel mark, up about 60% compared with the beginning of the year.
  Many participants believed that high global oil prices would have a profound impact on China.
  "At present, China has become a major oil and gas importer in the world and an important oil and gas consumer market in the world. In 2021, China's dependence on foreign oil and natural gas was 72.2% and 46%. Since the outbreak of the conflict between Russia and Ukraine, the international oil and gas prices have risen sharply, and the domestic market has been affected by international price transmission. The prices of refined oil and natural gas have risen steadily. On May 30, the price of domestic refined oil rose for the ninth time in the year, and the price of No. 92 gasoline reached 9." Yuan era. " Zhangchunjun, deputy general manager of Shanghai oil and gas trading center, said.
  Daijiaquan also pointed out that under the background of the current domestic economy affected by the COVID-19, China's oil imports have declined, but the import expenditure has increased significantly. From January to April this year, 170million tons of crude oil were imported, a decrease of about 10million tons compared with the same period in 2021, but the import amount reached US $115.1 billion, an increase of US $40.1 billion compared with the same period last year. "According to our estimation, if the annual average price of crude oil reaches $100 / barrel this year, the import expenditure will increase by more than $100billion, accounting for about 15% of China's trade surplus in 2021. It will have an important impact on China's RMB exchange rate and international balance of payments."
  It is very important to reflect the real market supply and demand in China
  Under the extremely uncertain international energy situation, it is very important to accelerate the construction of an oil and gas price system that can reflect the Asian market.
  "China still lacks an oil and gas trading market and pricing center that match the market position, and it is difficult to objectively reflect the real market supply and demand relationship in China in international trade negotiations." Zhangchunjun said, "At the same time, with the deepening of China's oil and gas market reform, the establishment and operation of the national pipeline network company, the oil and gas market system of multi-body and multi-channel supply of upstream oil and gas resources, efficient gathering and transmission of the midstream unified pipeline network, and full competition in the downstream sales market is gradually taking shape, and the marketization level is constantly improving. Against this background, China has accelerated the exploration and construction of a market-oriented and professional international oil and gas trading center to further improve market transparency To build an oil and gas price system that reflects the market supply and demand in the Asian region, which meets the needs of the current market development, and the conditions are becoming more and more mature. "
  At present, China has Shanghai Futures Exchange, Shanghai oil and gas trading center and other international energy trading venues. Among them, ine crude oil futures of Shanghai Futures Exchange has become the third largest crude oil futures in the world after WTI crude oil and Brent crude oil futures. Shanghai Petroleum and natural gas trading center also continues to maintain its position as the largest natural gas spot trading platform in Asia.
  "Based on the international experience, the construction of China's oil and gas trading and pricing center is very important. At present, the global bulk commodities mainly rely on the pricing system dominated by the futures market, making New York and London important energy pricing centers in the world. These benchmark prices guide the global oil and gas trade. The construction of China's oil and gas trading center urgently needs to strengthen the linkage between the spot market and the futures market, and jointly provide resources for market participants Configuration, trade financing, risk management and other comprehensive services. " Zhangchunjun said.
  (source: China Energy Network)

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