Crude oil supply & demand expectations indirectly affect glycol to the downside

As OPEC+ producers enter the second phase of production cuts, crude oil supply pressure is gradually picking up. According to OPEC's latest monthly report, crude oil supply increased in August, mainly from Saudi Arabia, the United Arab Emirates and Kuwait. The Saudi crude oil production increased by 475,000 barrels / day, rose to 889.2 million barrels / day, has exceeded the production limit, and the United Arab Emirates and Kuwait also increased the distribution of production of 180,000 barrels / day and 127,000 barrels / day, the overall oil-producing countries to cut production implementation rate fell sharply. Meanwhile, among those countries intending to make compensatory cuts, Nigeria did not cut production, and only Iraq complied with a 100,000 bpd cut, but still fell short of its commitment. In addition, OPEC + in the meeting held on September 17, did not reach a consensus to further reduce crude oil production, still maintain the scale of production cuts 7.7 million barrels per day, only to take the expected management, which is obviously unable to resist the momentum of other oil-producing countries supply incremental recovery.

Seasonal patterns of crude oil consumption from previous years, with the September 7 U.S. Labor Day, the end of the peak summer oil use in North America, oil demand into the seasonal off-season, the U.S. refinery operating rate peaked to fall, the previous slow de-stocking of crude oil inventories again into the accumulation state. According to statistics, as of September 11 week, the U.S. refinery operating rate remained at 75.80%, a sharp decline of 6.2% from the year's high of 82.00%, highlighting the seasonal peak season in the past. And U.S. commercial crude oil inventories, although down slightly week-on-week to 496 million barrels, but still at the highest value in the same period in nearly eight years. In addition to the U.S. and other overseas countries that will enter the seasonal off-season, Chinese demand will also slip. In August, China imported 47.48 million tons of crude oil, up 12.6 percent year-on-year, down 12.4 percentage points from July, according to data released by the National Bureau of Statistics. Although the growth rate of crude oil imports in August remained at double-digit growth, but 19%, 34% and 25% higher than May-July year-on-year, the growth rate fell sharply, and it is expected that the growth rate of China's crude oil imports will continue to fall in September under the influence of high inventories and off-season demand. From a long-term perspective, OPEC said in its monthly report that global oil demand will fall by 9.46 million barrels per day this year, more than the 9.06 million barrels per day expected a month ago. At the same time, global oil demand in 2020 will decline more than previously predicted, and next year's recovery will be slower than expected, which makes it difficult to rely on the demand-side power usher in a short- to medium-term rise in oil prices.

Overall, in the context of weakening supply and demand prospects in the oil market, future domestic and foreign crude oil futures prices are expected to show a pattern of easy to fall and difficult to rise, thus also dragging down the weakness of ethylene glycol to show downward trend.