On Thursday, amid rising expectations for a sharp interest rate hike by the Federal Reserve, crude oil varieties continued their decline from the previous trading day. As of the afternoon close, crude oil fell 3.6% to 665.9 yuan/barrel, high-sulfur fuel oil fell 4.9% to 2,755 yuan/ton, and low-sulfur fuel oil fell 4.35% to 4,443 yuan/ton.
Sui Xiaoying, chief petrochemical researcher at Founder Mid-term, told reporters that in general, although the global geopolitical situation is still unstable, its impact on the crude oil market has weakened, and market concerns about the economy and oil demand have become the main reasons for continued pressure on oil prices. .
According to reporters, crude oil prices have continued to expand this week since falling from their high point on August 25. In this regard, Zheng Mengqi, an energy and chemical researcher at Hizheng Futures, said that it is mainly affected by multiple factors such as supply, demand and macro factors. Superimposed on the recent sharp decline in natural gas prices, concerns about the energy crisis have declined, and crude oil prices have fallen to a new low since January 26.
“Specifically, first, Saudi Arabia has recently lowered its OSP in Asia and Europe, indicating that the current crude oil market demand is expected to be relatively weak. Second, the United States has entered the traditional autumn maintenance period, and crude oil processing demand has gradually declined month-on-month, and the summer gasoline demand season has ended. Gasoline cracking has continued to fall from a historical high of US$60.93/barrel on June 3 to around US$15/barrel recently, falling to the average level for the same period in previous years. Third, the Federal Reserve is expected to significantly raise interest rates, after Powell’s hawkish speech stated that even if it will lead to unemployment As interest rates rise, inflation must also be reduced. According to CME FED WATCH news, the probability of the Federal Reserve raising interest rates by 75 basis points on September 22 exceeds the probability of raising interest rates by 50 basis points. The U.S. dollar index has recently risen to a maximum of 110.785, putting crude oil prices under pressure.” Zheng Mengqi said.
From the current point of view, Sui Xiaoying believes that the crude oil market has recently faced a game between macroeconomic weakening and geopolitical disturbances, and the two factors can be said to be ebbing and flowing. Among them, the radical interest rate hikes by major economies such as Europe and the United States have gradually weakened the global economy, thereby suppressing oil consumption; while geopolitical factors mainly affect the supply side of crude oil. G7 member states plan to impose a price ceiling on Russian oil, which will add to the EU’s previous restrictions on Russian oil. With the embargo measures in place, it is expected that Russian oil supply will be further restricted in the future. At the same time, the Iran nuclear talks are still inconclusive, and the OPEC+ output policy has a greater psychological impact on the market. Therefore, overall, although the weakening of the global economy will reduce the focus of oil price operations, the disruption of the crude oil supply side by short-term geopolitical factors will slow down the decline in oil prices.
In Zheng Mengqi’s view, OPEC+ decided to cut production by 100,000 barrels per day in October to support oil prices. The Federal Reserve’s sharp interest rate hike has brought about economic recession expectations, resulting in weaker crude oil demand expectations. If the EU natural gas winter reserve is completed, energy crisis concerns will also be alleviated. , the center of gravity of oil prices may gradually shift downward in the long term.
Regarding the decline of fuel oil, Sui Xiaoying believes that it is dragged down by falling costs on the one hand, and also affected by its own supply and demand structure on the other. Currently, Russia’s high-sulfur fuel oil resources are gradually exported to the Asia-Pacific market, which has loosened the supply of high-sulfur resources in Singapore. Coupled with the peak season demand for power generation in the Middle East and other places, which is coming to an end, the demand for high-sulfur fuel oil has weakened. Against the background of high natural gas and diesel prices in Europe, the price of low-sulfur fuel oil has been significantly boosted. Especially under the strong logic of diesel, low-sulfur fuel oil will still be supported. However, as costs fall, the trend of low-sulfur fuel oil will also be suppressed, but its performance will be relatively stronger than that of high-sulfur fuel oil.