During the National Day, the international crude oil market quietly “changed”. In early September, oil prices continued to rise due to the unexpected extension of production cuts by Saudi Arabia and Russia. During the eight-day National Day holiday, all the gains were “voted away”. As of October 6, WTI and Brent closed at US$82.79 and US$84.58/barrel respectively, down 9.73% and 11.32% respectively from September 28, marking the largest weekly decline since March this year.
The main reasons for this round of sharp decline in oil prices come from three aspects: First, because oil prices rose too fast and too violently in the early stage, resulting in severe overbought, there is a technical risk of a correction; in addition, traders took profits at high prices. , leading to lower oil prices. Second, macroeconomic concerns have increased again. The poor performance of U.S. economic data has boosted expectations that the Federal Reserve will maintain high interest rates for a longer period of time, which may slow down economic growth. Third, EIA data showed that U.S. gasoline demand and distillate demand dropped sharply, with gasoline demand 5.0% lower than the same period last year, raising concerns about declining demand.
The editor issued a reminder at the beginning of this round of rising oil prices. This round of rising oil prices is a blind rise that is divorced from fundamentals. It is caused by the core oil-producing countries fermenting their production reduction plans for the fourth quarter in advance. Therefore, it is not long-term and relevant. Persistent. As we enter the fourth quarter, the negative factors in the crude oil market will be concentrated, putting pressure on the oil market.
Entering the fourth quarter, the global crude oil market may show a trend from strong to weak. From a supply perspective, Saudi Arabia and Russia have extended their production cut plans to the end of this year, which will shrink the total global crude supply. It is expected that this news will still be fermented in the early part of the fourth quarter, but as the market digests the news of production cuts, by the middle and late fourth quarter, the boosting effect of this news on the oil market will be greatly weakened. From the perspective of demand, the early fourth quarter is the peak season for oil consumption in Asia, which will provide support to the crude oil market. However, in the late fourth quarter, global oil consumption will enter the off-season. With the onset of the cold wave at the end of the year, regional demand for some petroleum products will be boosted, but the boost to the entire crude oil market will also be weakened.
From the perspective of the global economy, the pace of interest rate hikes in major European and American economies may further slow down, which will be beneficial to the stability of the crude oil market. But at the same time, it is not ruled out that when economic data performs poorly, interest rates will continue to be raised to boost economic data, which will produce factors that suppress oil prices in a short period of time. In addition, what needs to be paid attention to is whether the U.S. oil sanctions against Iran and Venezuela will continue to be relaxed, and whether the crude oil production and output situation of the above two countries will further improve. This will be an uncertain factor for the crude oil market.
From a technical point of view: the current KDJ indicator line extends downward in the weak area, indicating that the oil price trend is downward; the MACD indicator line extends downward in the strong area, and the green kinetic energy column expands, indicating that the bearish intensity of oil prices is still increasing. Combining the above factors, it is expected that international oil prices may first rise and then fall in the fourth quarter, with WTI’s mainstream operating range being 85-70 US dollars/barrel, and Brent’s mainstream operating range being 90-75 US dollars/barrel.