Crude oil

Regional contradictions will be reversed, and the price difference between the two oils will narrow. Judging from the changes in the price difference last week, the monthly difference of Brent has plummeted and is significantly larger than that of WTI, which indicates that the future market expects that supply and demand in non-U.S. Regions will change from gaps to excess; on the other hand, the crude oil inventory in Cushing is at 5 years Mid-to-low positions over the same period, which also supported the US oil monthly difference. From the perspective of the internal spread of U.S. crude oil, the monthly difference in the Midland region has been larger than that in Cushing and Houston. The monthly difference in Cushing and Houston has narrowed significantly and is lower than the current pipeline freight rate. This suggests two problems: the Permian Basin, the main shale producing area in the United States, may face difficulties in selling shale oil and increasing inventory expansion pressure; the narrowing of the spread between Cushing and Houston also indicates that the arbitrage window of the North-to-South oil has been closed, and the accumulated inventory pressure will be greatly increased. In the future, it may not be ruled out that the difference between Houston and Cushing be reverse and drive Midland crude oil to Cushing. We believe that in the next quarter, supply and demand in the non-U.S. Region will turn into excess. Regional price differences will also be repriced. At the same time as short-term accumulation of stockpiles, high-cost crude oil such as the Permian Basin and Canada oil in the medium term are likely to face reduced production. In terms of futures operation, it is advised to maintain the short strategy; reverse cash and carry arbitrage is recommended for Brent oil; for the strategy to long Brent2005 and short SC2005, considering the uncertainty of arbitrage position brought by the recent skyrocketing freight rates, it is recommended to stop profit. Guard against risks that epidemic was under control and OPEC reopens agreement to cut output.

Natural Rubber

Overseas rubber rebounded at the bottom. The main force contract of TF06 rose by 0.6 or 0.48% to 126.6. The main force contract of JUR08 rose by 3.2 or 1.97% to 165.4. The SHFE rubber was stronger and rebounded. The main force contract of RU05 rose by 80 or 0.76% and closed at 10,540, and the main force contract of NR05 rose by 120 or 1.36% and closed at 8,950. The quoted price for Qingdao rubber in USD rose by $5 to $10 per ton with normal inquiries. The quoted price of RSS3 was $1,580 per ton. The spot price or CIF of STR20 was $1,290 to $ 1,300 per ton. The CIF of SMR20 in August was $1,330 to $1,340 per ton. The CIF of mixed rubber from Thailand in July was $1,340 per ton.

The Cambodia Daily: the Cambodian government lowered its rubber export tariffs in order to minimize the impact of the decline in international rubber prices on the industry. A secondary decree signed by Cambodian Prime Minister Hun Sen on Sunday stipulated that no export duties would be levied on rubber export prices below $1,400 per ton. Tariffs ranging from $1,400 to $3,500 per ton will be subject to tariffs ranging from $25 to $200 per ton. The move is designed to help companies cushion the price drop caused by the coronavirus outbreak. Although the move was modest, local traders said it could help both rubber farmers and the industry.

As of March 13, the subtotal inventories of SHFE rubber were 244,000 tons, and futures inventories were 239,000 tons, the difference between the two was 50,000 tons (27,000 tons in the same period in history). Even without the difference, a slowdown in warehouse receipt growth can be clearly observed, which is much lower than the total production conversion rate of about 40% for latex. It proves that some of the full latex capacity has been converted into other products with low delivery profits.

Futures Operation Advice: The SHFE rubber rebounded. As for the main RU05 contract, it is advised to wait and see and pay attention to the support at the recent low level at 10,160 below.

(For reference only)