This week, the crude oil market continued its volatile trend, with oil prices falling for four consecutive trading days. Despite multiple short-term surges followed by declines, oil prices have shown relative resilience compared to other global commodities, reflecting a complex interplay between macroeconomic factors and supply-demand dynamics.
Macroeconomic Factors Suppress Risk Appetite
Recently, the Federal Reserve has signaled a more hawkish stance, indicating fewer rate cuts next year, leading to a continual cooling of risk appetite in financial markets and suppressing commodity prices. On Thursday, the overall pressure on commodities persisted, and oil prices weren't spared. However, the crude oil market has demonstrated relative resilience, supported by low inventory levels and improvements in supply-demand balance.
Supply-Demand and Geopolitical Factors Provide Support
Recently, inventories at WTI crude oil delivery locations have been low, causing its prices to outperform compared to other global regions, with the spread between WTI and Brent narrowing to about $3. Additionally, sanctions by Western countries on major oil-producing nations and geopolitical uncertainties have also provided some support for oil prices. Although oil prices weakened this week, the crude oil market's contango remains stable, indicating that tight supply continues to support prices.
Declining Crack Spread Limits Oil Price Rebound
In the refined oil market, the crack spread for gasoline in the U.S. has continuously hit new lows for the year, with subdued refined oil demand further limiting the rebound potential for oil prices. This suggests that although crude oil supply is tightening, the weak performance of the refined oil market adds certain pressure on oil prices.
Short-term Volatility Continues, Cautious Approach Advised
From a technical perspective, recent oil prices have fluctuated within a range, predominantly featuring short-term surges followed by pullbacks, with bearish factors slightly prevailing. Analysts advise that, currently, oil prices remain in a low-volatility pattern, and investors are encouraged to adopt a short-term approach, risk control, and cautious participation in trading.
Looking ahead, the tug-of-war between macro pressures and supply-demand support will continue to dominate oil price trends. If geopolitical tensions further escalate or inventories continue to decline, oil prices might find support; conversely, persistent macroeconomic pressure could maintain oil's weakening volatility. Investors need to closely monitor macroeconomic developments and market supply-demand changes to adjust trading strategies accordingly.
