One-sided drop of more than 10%! Will the crude oil market enter a new stage?

The sharp drop in crude oil prices during the National Day holiday has become the focus of investors’ attention. In fact, crude oil has experienced violent unilateral fluctua…

The sharp drop in crude oil prices during the National Day holiday has become the focus of investors’ attention. In fact, crude oil has experienced violent unilateral fluctuations during the National Day holidays in the past two years. The difference is that in 2022, it rose by nearly 14% unilaterally, while this year it fell by more than 10% unilaterally. Obviously, this kind of violent fluctuations in a short period of time is extraordinary, especially during important holidays in my country. The large unilateral market movements that occur without particularly important emergencies are often jokingly called “digging holes” by domestic investors. Quotes”.

The commodity market was a bit cold this holiday season, with crude oil leading the market decline with a drop of more than 10%. Even worse than crude oil was the European and American refined oil markets, especially U.S. gasoline, which once fell by more than 15%. Among them, oil prices fell by more than 5% in a single day on October 4. Five months later, the crude oil market once again experienced a sharp drop of more than 5%. This drop severely dampened the morale of bulls and investors’ expectations for the market outlook were significantly affected. Influence. The low-key conclusion of the OPEC meeting did not continue to bring new surprises to the market, and investors were somewhat disappointed. However, EIA data showed that Cushing inventories rebounded that night. Gasoline inventories were significantly accumulated and demand declined, which also continued to dampen market sentiment. Oil prices rose amid the emotional catharsis. fell sharply.

In fact, oil prices had already experienced a continuous decline before this. Global financial markets continued to be turbulent during the National Day holiday. The U.S. dollar performed strongly. Risk appetite in other markets generally cooled. Risk assets fell almost across the board. Gold and silver also continued to plummet. Against this background, the bullish enthusiasm in the crude oil market, which lacked new positive factors, also quickly faded, and the market also experienced a sharp decline. After the supply side failed to bring excitement to the market, oil prices have retreated by more than 10% from their highs, which means that oil prices have erased the gains in oil prices in early September after Saudi Arabia and Russia extended voluntary production cuts until the end of the year. Obviously, investor expectations have changed. In September, the monthly spread of the crude oil market widened significantly, and then the market trend quickly reversed. Under the weak performance of the demand side, the crack spread of refined oil products weakened significantly, and worries dominated the market in early October. Prices fluctuated, and the crude oil market continued the unstable state of the high oil price stage.

The OPEC+ Ministerial Committee (JMMC) meeting held on October 4 did not make any recommendations on the current oil production policy, and the next OPEC+ Joint Ministerial Monitoring Committee (JMMC) will be held on November 26. After the meeting, oil prices, lacking new drivers, plummeted continuously and hit a one-month low. After Saudi Arabia and Russia launched a voluntary production cut extension to the end of the year that exceeded market expectations in September, raising the focus of oil prices to another level, the supply side also played its role in pushing up oil prices to the extreme. After OPEC did not launch any measures to excite the market in October, as oil prices soared and the energy for long positions gradually depleted, oil prices began to see a sharp correction in October. Obviously, investors no longer only focused on supply-side production cuts, but also began to increase demand. Due to concerns about terminal changes, the crude oil market has ushered in a new stage.

On the one hand, the tight supply situation in the crude oil market is still difficult to alleviate in the short term. On October 4, Saudi Arabia reiterated its plan to voluntarily reduce production by 1 million barrels until the end of this year. Russia also stated that it will keep oil exports in October below the baseline of 300,000 barrels per day. . Both countries emphasized that the production reduction measures are to strengthen the preventive efforts of OPEC+ countries to support the stability and balance of the oil market. In addition, Russian Deputy Prime Minister Novak said that Russia will review its decision to reduce exports next month. The defensive performance of the absolute price difference between months in the crude oil market shows that tight supply is still an objective reality at this stage, and the low crude oil inventory situation is difficult to alleviate in the short term. It will still support oil prices in the next four quarters, keeping oil prices in a relatively strong area. However, the rising process of this factor in the past two months has been continuously priced in by the market, and its energy to drive upward oil prices has gradually been consumed. As oil prices enter the high-price zone, the impact of the macro factors faced by the financial market and the performance of the demand side of the crude oil market that worry the market is becoming greater. In addition to the shortage of diesel in Europe and the United States, which is still relatively strong, the global refined oil cracking gap has generally fallen significantly. Obviously The demand side has difficulty matching the strength of oil prices, which has also begun to gradually drag down the performance of crude oil.

The changes faced by the crude oil market during the National Day holiday are obviously dominated by negative factors and lack of positive factors. The demand for adjustment has been accumulated before, and the fall in oil prices is reasonable. However, such a large and rapid decline is suspected of being oversold. This market There are obviously different voices. Although there are disagreements on the sharp drop, it is reasonable to exist. The rapid decline in oil prices in the short term has alleviated investors’ concerns about the side effects of high oil prices, allowing oil prices to return to an area acceptable to both supply and demand below 85 US dollars per barrel. Oil prices The probability of stabilizing at the current position is high.

For the fourth quarter, on the one hand, production cuts by Saudi Arabia, Russia and others are stillThe supply side continues to be tight, with crude oil inventories at historically low levels. Turbulence on the supply side may trigger a change in market sentiment at any time. On the other hand, investors’ concerns about demand have significantly increased during the period of high oil prices. In the past week, EIA data showed that not only did U.S. gasoline Demand has fallen sharply, and inventories have also accumulated significantly. The downward pressure on the global economy and the Federal Reserve’s final decision to raise interest rates will still have an impact on investor expectations from a macro perspective at any time. It is expected that in the next stage, faced with the intertwining of long and short factors, investors will be more optimistic about the oil market in the later stage. The views are swaying, so pay attention to the rhythm.

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Author: clsrich