Where will international oil prices go back on a downward trajectory

Recently, international oil prices have continued to fluctuate
downward.
As of last week's close, light crude oil futures for October delivery on the New York Mercantile Exchange closed at $86.
61 per barrel, down 6.
65% last week; London Brent crude futures for November delivery settled at $92.
36 a barrel, down 6.
10%
last week.
At present, investors' concerns about weak global demand are the main factors leading the market decline, while the appreciation of the US dollar due to the tightening of the Federal Reserve's monetary policy has also added pressure
to oil prices.
However, despite future expectations, the current tight supply situation continues, and the Russia-Ukraine conflict and policy changes in the Organization of the Petroleum Exporting Countries (OPEC) and its oil-producing allies may still give upward momentum
to oil prices.
On the whole, under the intertwining of fundamentals and long and short, international oil price fluctuations will continue
in the short term.

Bearish factors: The outlook for global oil demand is gloomy

Recently released data shows that global manufacturing activity is declining, which also means that fuel demand, i.
e.
demand for oil, will fall
further.
In Europe, data released by market research firm S&P Global showed that the final value of the Eurozone's manufacturing purchasing managers' index (PMI) in August was 49.
6, the lowest since June 2020, and it was also the second consecutive month that it fell below the dividing line
.
Standard & Poor's Global said the rate of decline in the three major eurozone economies of Germany, France and Italy was particularly worrying
.
In addition, the rate of decline in the size of manufacturing orders is also worrying
.

The growth rate of the US manufacturing industry is also facing a decline, and the ISM manufacturing PMI released by the American Institute for Supply Management in August was 52.
8, unchanged from the value in July, and hit the lowest value
since June 2020 in two months.
The final U.
S.
manufacturing PMI compiled by S&P Global for August was 51.
5, down from 52.
2 in July and the lowest since
July 2020.
Both manufacturing indicators hit new lows, reflecting sluggish economic activity and may remain on a downward trend
in the future.

In Asia, Japan's manufacturing industry has declined significantly
.
Japan's manufacturing PMI fell to 51 in August from 52.
1 in July, the slowest pace since January, showing output pressures from soaring commodity prices and supply disruptions, as well as contraction
in new orders, S&P global data showed.
At present, Japan is still struggling to find momentum for economic recovery, especially as new coronavirus cases become more severe this month, which has heightened concerns about consumer spending
.

"The flood of factory activity data proves that the global economy is heading for a major contraction
.
" Edward Moya, a senior market analyst at OANDA, said
in a recent interview.
In its latest World Economic Outlook report, the International Monetary Fund (IMF) lowered global economic growth to 3.
2% in 2022, down from 6.
1% in 2021, the second time the IMF has lowered its full-year economic growth rate this year
.
The IMF also lowered the growth rate of the world economy to 2.
9%
in 2023 from 3.
6%.
The weakening global economic outlook has also led to a decline in market expectations for future oil demand, which in turn has led to the recent decline
in oil prices.

Positive factors: Uncertainty about OPEC+'s production increase plan has risen

However, it is worth noting that although the demand side is weak, the uncertainty on the supply side also persists, which will bring some support
to the future oil price trend.
The first thing to mention is the current production increase plan of OPEC and its oil-producing allies "OPEC+
".
According to Bloomberg data, OPEC's oil production rose by 270,000 barrels per day in July, with about two-thirds of the new output coming from Saudi Arabia
.
But for now, whether Saudi Arabia is willing to continue to release production has a question mark
.

First, Saudi Arabia faces the issue of capacity, which has now reached 10.
78 million barrels per day, the highest level since April 2020, a level
rarely seen in decades.
Not only that, some OPEC members did not maintain closed wells due to fiscal problems during the pandemic, which made it difficult to restart wells and expand production, resulting in production not meeting expectations
.

Second, the current pullback in oil prices is not a good thing
for the Gulf countries.
In 2020, international oil prices fell sharply, which hit the Saudi economy hard
.
This year's high oil prices have pushed Saudi Arabia to become the fastest growing economy
in the G20.
In the second quarter of this year, Saudi Arabia's average daily crude oil export revenue reached $1 billion, up 94% year-on-year, and the total oil export in the second quarter exceeded $91 billion, accounting for 80% of the total export goods in the quarter, a record high
.
Therefore, for Saudi Arabia, maintaining high oil prices is a more favorable economic option
.

In fact, Saudi Arabia threw out production cuts at last month's meeting, which means that the September meeting will not rule out the possibility
of discussing capacity reductions.
For now, most of the market expects "OPEC+" to keep its production target unchanged
at this week's meeting.
However, some market analysts said that "OPEC+" may reduce production
slightly.
It is worth noting that signals from the spot market show that the current oil market supply is still tight, and the actual production of many OPEC countries, including Libya and Iraq, is still below target
.
This means that the stagnation of the "OPEC+" production increase plan may bring a new round of growth impetus
to international oil prices.

In addition, in addition to the Middle Eastern countries led by Saudi Arabia, "OPEC+" also includes major
oil-producing countries such as Russia.
On September 2, the Group of Seven (G7) announced that it would impose a price cap
on Russian oil.
The sanctions were imposed in tandem with the ban on crude oil imports, that is, an embargo on crude oil on December 5 this year and an embargo
on refined oil products on February 5 next year.
The move has been supported by the European Commission and future implementation will require the consent
of EU member states.
Russia's response will stop supplying oil to countries that adopt price caps, which will further affect the global oil supply pattern
.