Industry News
International oil prices may show a trend of rising before falling in the fourth quarter
After entering the third quarter, investors' concerns about the tightening of crude oil supply have increased, and OPEC+additional production cuts from multiple countries have become the main driving force for the rise in oil prices. Firstly, prior to the OPEC+oil meeting in early July, OPEC+countries announced that they would implement additional production cuts. Among them, Saudi Arabia stated that it would extend its voluntary reduction of 1 million barrels per day until August, Russia stated that it would reduce August's crude oil production and export scale by 500000 barrels per day, and Algeria stated that it would reduce production by an additional 20000 barrels per day in August. Secondly, after entering September, Saudi Arabia and Russia officially announced an extension of the production reduction deadline. Saudi Arabia announced that it would extend the voluntary production reduction of 1 million barrels per day until December, while Russia also announced that it would extend the production reduction of 300000 barrels per day until December. In addition, both countries have stated that they will conduct monthly reviews during this period to consider the possibility of further reducing or increasing production. In addition, on the demand side, in addition to the continuous recovery of China's energy demand, as the northern hemisphere enters the summer demand peak season, the positive growth of crude oil consumption in Europe and America also benefits oil prices. On the other hand, the expectation of the Federal Reserve raising interest rates has sparked concerns about the economic outlook, which has continued to plague the market during the third quarter, to some extent limiting the upward space for oil prices. The Federal Reserve predicts that interest rates may still be raised once in 2023, and the Federal Reserve will maintain a high interest rate state in 2024. Investors are concerned that this may suppress economic growth and overall fuel demand.
Entering the fourth quarter, the global crude oil market may show a trend of turning from strong to weak. From a supply perspective, Saudi Arabia and Russia will postpone their production reduction plan until the end of this year, which will shrink the total global supply of crude oil. It is expected that this news will still ferment in the early fourth quarter, but as the market digest the news of production reduction, the boosting effect of this news on the oil market will be greatly weakened in the mid to late fourth quarter. From a demand perspective, the early fourth quarter is the peak season for oil consumption in the Asian region, which will provide support for the crude oil market. But in the late fourth quarter, global oil consumption will enter the off-season. With the arrival of the year-end cold wave, it will boost demand for some regional petroleum products, but the boost to the entire crude oil market will also weaken. From the perspective of the global economy, the pace of interest rate hikes in major European and American economies may further slow down, which will be conducive to the stability of the crude oil market. But at the same time, it is not ruled out that when economic data performs poorly, interest rate hikes will continue to be adopted to boost economic data, which will generate factors that can suppress oil prices in a short period of time. In addition, it is also important to pay attention to whether the US oil sanctions against Iran and Venezuela will continue to be relaxed, and whether the crude oil production and export situation of these two countries will further improve, which will be an uncertain factor for the crude oil market.
Overall, international oil prices may show a trend of rising before falling in the fourth quarter, with an expected mainstream operating range of $85-70 per barrel for WTI and $90-75 per barrel for Brent.
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