The second stage is from 1928 to 1973, during which the international cartel "Seven Sisters" controlled the price of the oil market. The first symbol is 1928 Archie Naccari Agreement signed by Exxon, BP and Shell. Later, four other oil companies, including Mobil, joined the agreement. In order to prevent vicious price competition among oligarchs, the agreement divides the market share of each signatory country and stipulates the pricing method of oil. That is, regardless of the origin of crude oil, its price is FOB in the Gulf of Mexico plus the freight from the Gulf of Mexico to the destination. Later, due to the increase of crude oil production in the Middle East, the European market was dissatisfied with the crude oil pricing standard, and the standard of the sum of FOB Persian Gulf and destination freight was raised.
Through this agreement, "Seven Sisters" suppressed the oil price to a very low standard for a long time, which greatly infringed on the interests of oil resource countries. In order to protect their own interests, the governments of oil-resource countries publicly condemned oil cartels and launched a wide-ranging oil nationalization movement. Under the resistance of both sides, the Organization of Petroleum Exporting Countries (OPEC) came into being. 1960 Saudi Arabia, Venezuela and other five countries voted to establish the Organization of Petroleum Exporting Countries, 1973 unilaterally announced the recovery of oil pricing power.
The third stage: the period of the Organization of Petroleum Exporting Countries.
The third stage is 1973 to the mid-1980s, and the price of crude oil is controlled by the Organization of Petroleum Exporting Countries. The fundamental goal of the Organization of Petroleum Exporting Countries is to control oil prices, eliminate unnecessary price fluctuations, ensure stable oil revenues of oil-producing countries, and safeguard the interests of oil-producing countries. In 10 years after 1973, OPEC members gradually nationalized oil companies and adopted the strategy of directly fixing oil prices. OPEC takes the price of Saudi 34 light oil as the benchmark oil price. There is a certain price difference between different oil products, and all OPEC members need to give up their independent decision-making power on oil production in order to maintain the stability of this price difference system. At this stage, the oil price gradually rose from the initial $3 per barrel to more than $30. The rise in oil prices has shifted oil interests from western developed countries to oil resource countries. During this period, the number of members of the Organization of Petroleum Exporting Countries has also expanded from the initial five to 13, which is not much different from today's scale.
However, in the mid-1980s, persistently high oil prices led to a decrease in oil demand and a relative overcapacity. In addition, the oil production of oil-producing countries other than the Organization of Petroleum Exporting Countries has increased. In order to maintain its share in the international crude oil market, the Organization of Petroleum Exporting Countries has adopted the strategy of reducing prices and protecting its share. During this period, the Organization of Petroleum Exporting Countries first maintained its market share through "price war" with non-OPEC oil-producing countries, and forced non-OPEC members to compromise and agree to cut oil production, and the quota system was re-established among OPEC members. However, the reduction of crude oil production led to the rise of oil prices again, which caused consumers to panic, and a large number of oil trade shifted from long-term contracts to the spot market. The growing spot market has gradually weakened the influence of the Organization of Petroleum Exporting Countries on crude oil prices.
Since then, until 2004, although the Organization of Petroleum Exporting Countries still adopted the strategy of nominally setting the target oil price directly, and adjusted the target oil price twice during this period, except for inflation, the target oil price did not rise sharply. This shows that the influence of the Organization of Petroleum Exporting Countries on oil prices has decreased.
At the beginning of the 20th century, due to the development of China, Indian and other emerging economies, the actual oil price of the Organization of Petroleum Exporting Countries has been far higher than the target oil price, and its pricing strategy can no longer meet the market demand. On June 5438+ 10, 2005, the Organization of Petroleum Exporting Countries formally gave up its direct intervention in oil prices, and then gradually relaxed the quota system among its member countries. At this stage, the Organization of Petroleum Exporting Countries actively adopted the strategy of keeping the oil supply market moderately tight. Coupled with the unstable political situation in the Middle East, the international oil market supply has been tight.
Although the Organization of Petroleum Exporting Countries (OPEC) proposed that it would only curb the oil price increase by increasing production if it was determined that the oil price increase was due to the imbalance between supply and demand rather than speculation, the increase in its output was not enough to cope with the rising demand, and its essence had lost its ability to curb the oil price increase. Because the economic situation of OPEC members still depends heavily on oil export income, when oil prices fall, OPEC members will not reduce production to maintain oil prices, but adopt a competitive strategy of increasing production. Since 1980s, the influence of the Organization of Petroleum Exporting Countries (OPEC) on crude oil prices has been declining, and so far it has no direct control ability.
The fourth stage: the "exchange" period.
The fourth stage is from the mid-1980s to the present. During this period, spot market trading was the main trading form of international crude oil. At the beginning of its formation, the spot market was only used as a place for major oil companies to adjust surplus and shortage and exchange oil products, so it was also called surplus market. However, after the 1973 oil crisis, the oil trading volume changed from the long-term contract market to the spot market, and the price of the spot market began to reflect the cost and marginal profit of oil production, which has the function of price discovery. At present, there are four major spot trading markets in the world: new york, London, Rotterdam and Singapore.
Under the pricing system dominated by spot and futures markets, the international crude oil market adopts the formula pricing method, that is, the benchmark futures price is the pricing center, and the crude oil prices of different regions and grades are the benchmark prices plus a certain premium.
The formula is as follows: P=A+D, where p is the settlement price in the spot market of crude oil trading, a is the benchmark price and d is the premium. At present, there are two international benchmark crude oils, namely West Texas Light Crude Oil Price (WTI) and North Sea Brent Crude Oil Price (Brent). Formula pricing method is a mechanism to link the benchmark price with the price of crude oil for specific delivery, in which the premium and discount are set when the contract is signed, usually by the exporting country or information company. It should be noted that the formula pricing method can be used for any contract, whether it is spot, forward or forward.
Historically, WTI crude oil has always occupied a relatively core position in the international crude oil market. This is because WTI mainly reflects the supply and marketing of crude oil and the inventory situation in the US market. After World War II, the United States gained a great voice in the world economy, and North America has always been the largest crude oil consumption area and an important crude oil production area. In addition, the quality of WTI crude oil is better than Brent, and it is more suitable for oil production, so the change of WTI price can have a greater impact on the world economy, and WTI is also more suitable as a benchmark crude oil.
However, in recent years, with the development of emerging economies, the influence of Europe, Asia and the Middle East on international crude oil prices has gradually increased. The pricing system based on Brent is becoming more and more perfect and its influence is rising, and it has become the most influential benchmark crude oil. Nearly 70% of international crude oil transactions are based on Brent crude oil. Us energy information administration (EIA) also used Brent instead of WTI as the benchmark crude oil for the first time in its 20 13 energy outlook.
Although the Platts pricing system based on Brent was investigated by the European Commission in May of 20 13, because its quotation system similar to Libor made it possible for Platts price to be manipulated, that is, Platts price could not fairly reflect the fundamentals of international crude oil supply and demand, and the market also speculated that WTI might re-establish its position as a weather vane. However, considering that Platts pricing system is supported by the huge trading volume in the spot market, we still need to know Platts pricing system deeply.
Brief introduction of Platts price system
Platts price system is a crude oil price system based on Brent, and its prices include spot Brent, forward Brent, Brent spread (CFD) and other important OTC market quotations. Its quotation system is similar to Libor, which is based on the closing price provided by major oil companies on the same day and comprehensively evaluated.
Here are several prices closely related to the spot pricing of crude oil.
1. Beihai crude oil.
Brent crude oil used in Platts' price system refers to the crude oil produced in the North Sea, which is a basket of crude oil of Brent, Fudis, Osberg and Ekofisk (taking the initials of the four crude oils as BFOE). At the beginning of the general pricing system, Brent crude oil was considered as the representative of North Sea crude oil, and only its price was used as the benchmark oil price. However, in the 1980s, the output of Brent crude oil dropped sharply, and by the beginning of the 20th century, the output of Brent oilfield had dropped to a relatively low level. Therefore, Platts adopted a basket of oil prices of Brent, Foday and Osberg (BFO) in 2002; In 2007, it joined Ekofisk and founded BFOE. But out of habit, we still use Brent crude oil to refer to BFOE today.
Using a basket of crude oil as the benchmark price is conducive to expanding the market base of the benchmark price. However, due to the different quality of these crude oils, among them, Fudis and Osberg have lower density, lower sulfur content and lower quality, and Ekofisk has lower quality. These crude oils can be used for forward and futures delivery, which leads BFOE sellers to prefer to deliver low-quality crude oil, such as Ekofisk, rather than high-quality crude oil.
In order to encourage sellers to deliver more high-quality crude oil, Platts introduced quality discount factor (de- escalator) and quality premium factor (Quality Premium) in 2007 and 20 13 respectively. The quality discount coefficient means that when the sulfur content of crude oil delivered by the seller exceeds 0.6%, the seller shall pay the buyer 60 cents/barrel for each sulfur content exceeding 0. 1%.
Contrary to quality discount, quality premium means that the buyer of crude oil must pay the seller in return when receiving crude oil with higher quality than guaranteed at the time of transaction. For two high-quality crude oils, Osberg and Ekofisk, the quality premium coefficient is 50% of the net difference between the two grades of crude oil and the most competitive crude oil of BFOE within two months before the valuation announcement date.
2. Spot Brent.
Spot Brent is a rolling valuation, which reflects the spot price of BFOE from the valuation date 10-25 days (Monday-Thursday valuation is spot Brent delivery from the valuation date 10-25 days, and Friday valuation is spot Brent delivery from the valuation date 10-27 days), and here it is/kloc-0. Due to the characteristics of crude oil transportation and storage, spot delivery of crude oil does not happen frequently, which makes the spot market of crude oil have a certain long-term nature, and the valuation window period arises. The practice of 25 days comes from practice, and the seller must inform the buyer of the date of shipment 25 days before delivery. Therefore, although the spot Brent is usually regarded as the spot market price, it actually reflects the forward price of 10-25 days.
Initially, Platts adopted a valuation window of 7- 15 days, which was consistent with the valuation window of Brent crude oil, but the valuation windows of other North Sea crude oil varieties were longer than Brent crude oil. With the decline of Brent crude oil production, Platts increased the valuation window to 10-2 1 day in order to make Platts price closer to the practice of the North Sea market. With the further decline of Brent production, in June of 20 12, Platts further extended the window period to 10-25 days.
In addition, spot Brent reflects a basket of oil prices of BFOE, not the algebraic average of four crude oil prices, but better reflects the prices of these varieties by giving the most competitive varieties the greatest weight, thus ensuring that the valuation reflects the fundamentals of supply and demand.
3. Striker Brent.
Forward Brent is the earliest Brent financial instrument. Brent forward is a forward contract, the specific delivery month is determined in the future, and the specific delivery date is uncertain. Brent forward quotation is generally 65438+ 0-3 months in the future. For example, in May, there will be Brent forward quotation from June to August. These quotations are determined by the contract and are specific to the type of oil delivered.
4. Brent spread contract.
The contract for differences (CFD) is a relatively short-term swap, and its price represents the market price difference between the spot Brent valuation and the forward Brent price during the swap. Platts Energy Information provides CFD valuation for the next 8 weeks, which will be evaluated regularly every week. There are also publicly traded 1 month and 2-month CFD in the market.
CFD can convert the random market spread between spot Brent and forward Brent into a fixed spread during the swap period, hedge the risk of spot Brent market for the holders of BFOE spot positions, and can also be used for speculation.
Spot pricing of crude oil based on Brent crude oil
According to the formula pricing method, the spot price of crude oil is the benchmark price plus a certain price difference. In Platts price system, the benchmark crude oil is Brent and the benchmark price is spot Brent. On the basis of the benchmark price, the spot price should be added with the spot premium or minus the futures premium in addition to the difference stipulated in the contract. Among them, the data of futures premium or spot premium are provided by CFD market.
For example, the premium of a transaction is determined to be $65,438+0.00/barrel, and the transaction is determined to be completed within one month. At this time today, the spot price of this transaction (that is, the forward price at this time today) is the current spot Brent price plus the CFD price difference in the corresponding period, plus a premium of $65,438+0.
In fact, the forward price of spot Brent, that is, the forward Brent, is obtained by adding the CFD price difference of the corresponding period to the spot Brent. Therefore, the above pricing method can also be understood as the forward price of spot Brent plus the price difference of different varieties. Using the quotation information of spot Brent and CFD, the forward price curve of spot Brent can be obtained.
It should be noted that different varieties of crude oil have different valuation windows and average pricing cycles (traditionally, spot crude oil is priced within a certain period after shipment, and the average value of this period is called average pricing cycle), so Platts price system provides spot Brent prices of different crude oil varieties in corresponding periods. The corresponding periods of different varieties are shown in table 1. Taking Mediterranean varieties as an example, Platts' price system will provide the spot price of Brent 13-28 for each transaction, plus the CFD price corresponding to this transaction, plus a certain price difference, and the spot price of this transaction will be obtained.
In addition, the London International Petroleum Exchange (IPE) Brent futures contract has a large trading volume and is often used as the benchmark price. When the Brent futures contract is due for delivery, the cash delivery is based on the Brent index, which is based on the forward price. In other words, the price of Brent futures will converge to the Brent forward price, not the Brent spot price.
Although Brent futures contracts are not physically delivered, holders can convert their positions into spot positions through EFP, that is, forward positions or 25-day spot positions. The price of EFP is decided by both parties. EFP links Brent crude oil futures market with spot market.
Platts price system provides the forward price valuation of EFP, reflects the price difference between futures and forwards in the corresponding delivery month, and links futures and forward markets. Therefore, the spot price based on Brent futures price is equal to the futures price plus EFP price difference, plus CFD price difference of the corresponding period, and finally plus the contract price difference.