Brent crude fell below $90 / barrel The market once again tested OPEC's determination and ability to hold prices

Overall, the crude oil supply side is inelastic under the pattern of OPEC production cuts and slow shale oil production increases, giving strong support for oil prices, while the demand side is dominated by the pace of the Fed's interest rate hikes, the domestic epidemic and other factors, the uncertainty is large, the market expectations are repeated, and oil prices are still dominated by high volatility in the short term
.

West Texas Intermediate (WTI) crude futures for December delivery fell $3.
95, or 4.
61%, to settle at $81.
64 a barrel on the New York Mercantile Exchange on Nov.
17, the lowest since
late September.
Brent crude tumbled 3.
31 percent to $89.
78 a barrel, falling below $90 a barrel
for the first time since October.

Tong Chuan, senior researcher at Galaxy Futures Heavy Oil Heavy Oil, told reporters that overnight Fed official St.
Louis Fed President Bullard said that even using the "dovish" assumption, the Fed's policy rate target range needs to rise to at least 5.
00%-5.
25% to strictly curb inflation, while a stricter assumption will require interest rates to rise above
7%.
This statement pushed the intraday dollar index stronger, and oil prices fell
sharply as fears of a future U.
S.
recession and weaker crude oil demand increased.

In addition, in the sixth round of EU sanctions, the oil export ban will be implemented on December 5, the market accelerated stockpiling in the last period of the buffer period, crude oil and refined oil exports have rebounded to a certain extent recently, the crude oil supply side is relatively loose, and the Brent monthly difference has weakened
.
WTI was weaker in anticipation of a pessimistic consumption outlook and increased export pressure
.

At present, the price of Brent has fallen to around $90, and the market will once again test the determination and ability
of OPEC (Organization of the Petroleum Exporting Countries "OPEC") to raise prices.
At the OPEC+ meeting in early October, the group plans to cut production by 2 million b/d from November, and actual implementation could be between
800,000 b/d and 1 million b/d.
OPEC+ will hold a new round of monthly meetings on December 4, which is likely to maintain the previous plan, and may also release more favorable price signals
.

Overall, the crude oil supply side is inelastic under the pattern of OPEC production cuts and slow shale oil production increases, giving strong support for oil prices, while the demand side is dominated by the pace of the Fed's interest rate hikes, the domestic epidemic and other factors, the uncertainty is large, the market expectations are repeated, and oil prices are still dominated by high volatility in the short term
.

Dong Dandan, chief researcher of CSC Futures Energy, told reporters that crude oil supply is not abundant, Saudi Arabia's shipping has declined since November, and the logistics disruption caused by sanctions may still lead to reductions, for example, Chinese refiners are worried that they cannot buy enough crude oil
.
Brent's main contract in January fell below $90 / barrel intraday, Thursday's sharp volatility is also related to WTI for the month, the current global economy has no major risk events, the crude oil market does not have the conditions to continue to challenge the OPEC+ bottom line, pay attention to the support
of Brent's key points.

The logic of market transactions is mainly the current global economic weakening and sanctions

The energy team of a leading futures company told reporters that the recent decline in international crude oil prices has continued, and in the process of falling crude oil prices, the monthly difference structure of crude oil and refined oil futures has continued to weaken, and the center of gravity of diesel cracking spread, which was strong in the early stage, has also fallen, and the core logic of market trading is that the current global economic fundamentals have weakened
.

On the demand side, although the optimization of China's national defense epidemic policies has boosted market confidence, it will take some time for various policies to be successfully implemented, and it will take time for the actual demand for crude oil to recover; Overseas, the weather in Europe and North America this year's heating season is generally warm, heating demand is weak, coupled with European and American gas prices have been sharply corrected from highs, and the speculation effect of oil and gas substitution has weakened
.

OPEC recently released its monthly report, once again lowering the growth forecast for global crude oil demand in 2022, while further lowering the figure
for next year.
It is understood that this is the fifth time OPEC has lowered this expectation
in nearly half a year.
OPEC pointed out that economic challenges such as high inflation and interest rate hikes are becoming increasingly severe
.
OPEC said in its monthly report that oil demand growth in 2022 would be 2.
55 million b/d, or 2.
6 percent, 100,000 b/d
less than its previous forecast.

On the supply side, the recent marginal improvement of the momentum of US production increase, the growth rate of drilling rigs has risen, production has risen to 12.
1 million barrels per day, coupled with the dumping and tax reduction behavior of US oil companies at the end of the year, the pressure on the spot side has increased
.

In the United States, capital expenditure by U.
S.
oil companies in the third quarter increased by nearly 30% compared with the second quarter, and the current U.
S.
new drilling oil prices are enough to meet the demand for completions, and completions growth no longer depends on DUC release
.
However, due to low upfront investment, the current number of rigs in the United States is still a certain gap from the pre-epidemic level, and the expectation of increasing production in the United States may be mainly fulfilled in the second half of next year, and production may increase by 500,000 barrels to 600,000 barrels per day year-on-year
.

If OPEC maintains its current swing producer adjustment role, the weak balance benchmark in 2023 is expected to keep crude oil prices volatile, mainly waiting for demand to give direction
.
If the overseas economy falls into recession next year, the center of gravity of oil prices will be a correction, and the lower support may be around the average fiscal balance oil price of $70/barrel OPEC
.
If the European and American economies achieve a soft landing, coupled with the optimization of China's economic repair and epidemic prevention policies, oil prices may fluctuate at a high level next year
.

Domestic refined oil products may be lowered for the eighth time in the year

It is worth noting that at 24 o'clock on November 21, domestic refined oil products will usher in a new price adjustment window
.
In this cycle, the international crude oil shock moved downward, and the fluctuation range was large
.
At present, the change rate of domestic reference is in the negative range, and the probability of lowering the retail price of domestic refined oil products in this round is relatively large
.

Yang Xia, an oil product analyst at Zhuochuang Information, pointed out that since this cycle, the international crude oil market has maintained volatility and a large
range.
The market divergence lies in demand expectations: OPEC's monthly report shows that demand expectations are lowered, mainly bearish on the market; However, the IEA (International Energy Agency) is relatively optimistic and raises its demand forecast
.
In this context, the international oil market fluctuates greatly
.
Affected by this, the domestic reference crude oil change rate turned from positive to negative, and the probability of lowering the retail price of refined oil in this round is relatively large
.

According to Zhuochuang information calculation, as of the close of November 17, the reference crude oil change rate on the 9th working day in China was -1.
95%, and it is expected that gasoline and diesel will be reduced by 100 yuan / ton, which is converted into a price increase, and No.
92 gasoline and No.
0 diesel will be reduced by 0.
08 and 0.
09 yuan respectively, and the price adjustment window will be 24 o'clock
on November 21.

The retail price adjustment of refined oil will be the eighth reduction this year, and after the implementation of the reduction policy, consumers' travel costs will be reduced
to a certain extent.
Taking a small private car with a fuel tank capacity of 50L as an example, filling a tank of No.
92 gasoline will cost about
4 yuan less than before.