Oil Prices Are "Negative" Overnight: What Is The Impact On The Domestic Market?

The New York WTI crude oil futures contract, the US Texas West light crude oil futures contract, will expire today. What is the impact of the current negative oil price on the domestic crude oil market? What is the impact of the May crude oil futures market?

The impact of "negative oil price" on China

Market institutions say that since the May contract is about to expire and is no longer the most active contract, negative oil prices do not accurately reflect current oil prices. This can only be regarded as a short-lived price anomaly, which will not be affected by the negative oil price for the domestic refined oil pricing.

Jin Lian Chuang, senior analyst Han Jingyuan of the Ministry of energy: our domestic oil pricing mechanism adopts the main contract of futures. At the present stage, WTI and Brent, for example, adopt the June contract of futures contracts, so the impact on our pricing mechanism and the extent of price adjustment have no substantive impact.

In addition, our pricing mechanism has implemented a $40 floor price policy in mid March, so there will be no significant change in terminal oil prices for the time being.

Data show that China's crude oil dependence on foreign countries is about 70%, and imported oil varieties are mainly middle east and Russian oil, which are priced in Dubai and Brent respectively. During the period of low oil prices, China's crude oil imports increased by 4.9% over the same period of 1-3 months.

Han Jingyuan, a senior analyst at the Ministry of energy, said that WTI is more of a target role in the pricing mechanism, so its pricing factor is not very large, and it should be around 20%.

Lv Jianzhong, vice president of China Petroleum Economic and Technological Research Institute: the price of WTI is a price in North America. It has always been lower than Brent's oil price. It is restricted by regional market and the liquidity of the world is relatively poor. Yesterday's negative oil price is actually an extreme phenomenon of the rules of the game in the oil futures exchange market, and it can not represent the supply of the whole world or other regions. Need relation.

Our country is generally a large oil and gas consuming country and a large importing country. But now we have limited reserve capacity and limited global reserves. We should create conditions to increase oil reserves, including strategic reserves and commercial reserves, to cope with the future changes.

How does "negative oil price" trade?

Negative oil prices can not be sold, OK? How can futures price be bought and sold?

Experts say: first, negative oil prices are not sold. Because oil is a dangerous chemical, it is not like milk beer, excess can be poured out, its rigidity is particularly strong, there are safety and explosion-proof management requirements, so the more production of oil, if not pay the money to let traders away, it can not be stored, will cause a safety accident. Therefore, not selling can not be done.

Second, futures contracts are contracts. Normally, when prices fall to zero, the transaction is over. Recently, the New York commodity exchange specially revised the software system to make the trading of negative oil prices possible and cancelled the fusing mechanism. This practice is actually encouraging oil prices to fluctuate, attracting more speculative funds for the exchange, and earning membership fees, margin, clearing fees and so on. This practice has indeed attracted global attention, laying the foreshadowing for the next round of sharp fluctuations in oil prices.