It is expected that short-term oil prices will fall or shock recovery The supply and demand pattern of the oil market may improve in the second quarter

In the first week after New Year's Day, international oil prices performed sluggishly, with Brent crude oil and U.
S.
crude oil falling more than 8% for the week, the worst start since 2016
.
Last week, the oil market was hit by multiple blows, the dollar exchange rate once rose sharply, winter temperatures rose, natural gas prices plummeted, persistent fears of recession and other negative factors were released, oil prices fell more than 9% in the first two days, while the increase in U.
S.
commercial crude oil inventories was lower than expected, and the decline in refined oil inventories brought some respite to oil prices
.
The main contract of U.
S.
crude oil fell 8.
14% on a weekly basis, the main weekly decline in crude oil fell 8.
51%, and the domestic SC crude oil fell 4.
34%
on a weekly basis.

Pessimistic demand expectations have intensified recently, weighing on market sentiment
.
The Federal Reserve and other major central banks have tightened monetary policy aggressively, further raising fears of
a global slowdown.
Last Wednesday, the minutes of the Fed's December policy meeting showed that none of the 19 senior Fed officials thought it appropriate to cut interest rates this year, again sending hawkish signals, a strong dollar and oil prices extended their losses
.
In addition, the current high inflation in the EU and more certain aggressive interest rate hikes have weighed on economic growth, coupled with the IMF's forecast that one-third of the world's economy will enter recession, with global economic growth of 2.
7% in 2023, down from 3.
2% in 2022, further adding headwinds
to crude oil demand expectations.
Weak demand for crude oil is expected to be the main variable
in suppressing oil prices in the new year.

In addition, the winter storm that swept through the United States at the end of December brought U.
S.
refinery capacity utilization to its lowest level in nearly two years, the largest decline since February 2021, resulting in higher U.
S.
commercial crude inventories and lower gasoline and distillate inventories
.
However, net U.
S.
crude imports plunged by 9 million barrels, partially offsetting the impact
on crude inventories from a 16.
3 million barrel drop in refinery processing.
U.
S.
crude oil inventories, including strategic reserves, totaled 793.
026 million barrels in the week ended December 30, 2022, down 1.
05 million barrels from the previous week, according to the U.
S.
Energy Information Administration.
U.
S.
commercial crude inventories stood at 420.
646 million barrels, up 1.
69 million barrels from the previous week; U.
S.
gasoline inventories totaled 222.
662 million barrels, down 350,000 barrels from the previous week; Distillate inventories were 118.
785 million barrels, down 1.
43 million barrels
from the previous week.

Demand for refined products fell across the board last week
.
Total U.
S.
refined oil demand averaged 20.
473 million barrels per day in the four weeks ended Dec.
30, falling to its lowest point since June 2021 and 4.
3% lower than a year earlier, according to the U.
S.
Energy Information Administration.
Motor gasoline demand averaged 8.
452 million barrels per day for four weeks, 7.
0% lower than the same period last year.
Distillate demand averaged 3.
615 million barrels per day for four weeks, 12.
4% lower than the same period last year; The four-week average daily demand for kerosene-based jet fuel was 5.
1 percent
higher than a year earlier.
In single-week demand, total U.
S.
oil demand averaged 18.
19 million barrels per day, 4.
631 million barrels lower than the previous week; Among them, the daily demand for gasoline in the United States was 7.
514 million barrels, 1.
813 million barrels lower than the previous week; Distillate demand averaged 2.
799 million barrels per day, 1.
081 million barrels
per day lower than the previous week's average.

In summary, weak demand expectations in the first week after the start of the new year once again enveloped the market
.
The hawkish expectations of the Federal Reserve, the continuation of inflationary pressures in the European Union, and the decline in natural gas demand after warmer weather in North America weighed on crude oil demand expectations, and weak demand expectations will be the main variables
affecting oil prices in the new year.
On the supply side, EU sanctions against Russia have led to a decrease in Russian exports, OPEC supply is relatively stable, and short-term supply support margins have weakened
.
In the medium term, Russian production is expected to decline by 800,000-900,000 b/d in 2023, while the demand side focuses on China's demand variables
.
At present, China is experiencing the first wave of infection after the relaxation of epidemic prevention, and after the peak, it may usher in rapid growth
.
It is expected that the short-term oil price will fall or the shock will be repaired, and the supply and demand pattern of the oil market may improve
in the second quarter.

From the perspective of price spread performance, the recent weakening of the oil price BACK structure shows short-term supply and demand pressure
.
In terms of regional differences, the B-L spread in the later period under the EU's sanctions against Russia may continue to be at a high level, the early domestic epidemic spread limits demand expectations, the SC trend is weaker than the external crude oil, and in the later period, with the end of the epidemic peak, it is expected that the B-SC spread will weaken or have opportunities
.
At present, the VIX index is still at a high of 45-50, and the risk premium remains
.