Limited crude oil support, increased pressure for polyethylene prices to fall

I. Crude Oil Price Trend

In March, crude oil showed a volatile upward trend. The steady progress of major OPEC production cuts boosted oil prices. Saudi Arabia’s production cuts were remarkable and its plan to promote the extension of production cuts was remarkable. In addition, the number of active oil drilling wells in the United States dropped sharply, and crude oil stocks decreased. However, worries about slowing economic development limited the upward space for oil prices. As of March 18, Brent charged $67.54 per barrel and WTI $59.09 per barrel.

II. Futures Price Trend

Since mid-March, the trend of futures has fallen sharply. Liansu L1905 contract has recently fallen below the previous 8500 point support and reached a new low of 8300. At present, Liansu L1905 contract daily line above the mean line suppression is strong, there is a possibility to continue downward, but the lower detection 8250-8300 has support, the position of Yongan futures single dominant, so the overall decline is limited. In the short term, the 8500 position of L1905 contract of Lianyuan Plastics has been changed from support position to pressure position, and the upstream is weak. It is suggested that the operation of empty sheet holding be changed to short multi-operation after breaking through 8450-8500 position.

3. The Trend of Spot Price

In March, polyethylene spot continued to decline, the accumulation of petrochemical stocks caused by the Spring Festival holidays was difficult, and petrochemical had to implement a price reduction policy. Traders have a pessimistic mentality and follow the downturn to seek delivery. However, the downward factors of both spot and futures lead to cautious downstream takeover, low market trading atmosphere and high transaction resistance. Overall, although oil prices have risen, the slowdown in economic development has limited upward space. Polyethylene futures and spot markets have declined one after another, coupled with the high spot petrochemical inventory, so oil prices support this market is very limited, market pessimism is strong, market pressure is particularly obvious.