This week (September 26th to October 9th), crude oil overall showed a trend of rising and then falling. The average price of WTI for this period was $71.60 per barrel, an increase of $0.50 per barrel, or 0.70%, compared to the previous week. During the week, the main factors that supported oil prices included: investors' concerns that further escalation of geopolitical conflicts in the Middle East could lead to disruptions in oil production in the region. Factors that hindered the rise in oil prices included: OPEC+'s plan to restore crude oil production and the increase in U.S. crude oil inventories.

Review of International Crude Oil Market Trends

Review of This Week's Crude Oil Spot Market

During this period, the average international crude oil spot price increased month-on-month. In the Middle East crude oil market, crude oil trading was sluggish, with Dubai crude oil spot estimates falling to $77.985 per barrel, and Oman crude oil spot estimates rising to $78.19 per barrel. The Gulf Commodities Exchange (GME) December Oman crude oil futures price rose to $78.16 per barrel. The near-month Brent/Dubai crude oil EFS price difference increased to +$2.51 per barrel. Saudi Arabia has raised the official selling price of Arab Light crude oil sold to Asia in November to the highest level since July, that is, the November Arab Light crude oil official selling price was raised to a premium of $2.2 per barrel over the average price of Oman/Dubai, an increase of $0.9 per barrel compared to the October official price. However, Saudi Arabia lowered the official selling price of crude oil sold to the Mediterranean, North America, and Northwest Europe. Many end users have completed the negotiation for November loading cargo and have turned their attention to December loading crude oil cargo. Vietnam PV OIL issued a contract tender for the sale of 600,000 barrels of Nam Con Son crude oil per month from October to December. The tender closed on October 4th, with the quotation valid until October 11th. In the Asia-Pacific crude oil market, refineries will undergo planned maintenance in October, and the market is paying attention to the operation rate of refineries. South Korea's S-Oil has shut down the No. 1 crude oil distillation and some other units at the Ulsan refinery for planned maintenance. In addition, the spot price difference for Miri crude oil loading in November fell due to the loose supply and demand fundamentals. The trading price for Miri crude oil loading in November is reportedly in the mid-range of a $3 per barrel premium over spot Brent. There are still several shipments of Malaysian crude oil cargoes for October to November in Malaysia that have not found buyers, due to weak profits for diesel and other medium distillate oils, with most end users downgrading their valuation of Malaysian crude oil.

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Analysis of Factors Affecting Crude Oil Futures Market

Supply and Demand Factors

During this period, on the supply side, Standard Chartered believes that if OPEC+ oil-producing countries keep their promises, there is unlikely to be a supply surplus at least until the fourth quarter of 2024 and the first half of 2025. If all commitments are fulfilled, adding the compensation plan to the recently announced production reduction targets due to the postponement of implementation, will lead to a reduction in OPEC production by 530,000 barrels/day in the fourth quarter of 2024, 540,000 barrels/day in the first and second quarters of 2025, and 560,000 barrels/day in the third quarter of 2025.

On the demand side, the biggest concern for the Asian refining industry is weak demand, with key petroleum products showing cracks amid lukewarm economic activity. Overall economic activity in the entire East Asian economic bloc remains weak, with demand for gasoline and petrochemical products continuing to lag due to poor performance in manufacturing and construction, as well as low commodity and service exports. However, some institutions believe that concerns about an oversupply in the oil market are completely exaggerated, and the market is overly worried about China's oil demand amid weak U.S. crude oil production.Crude Oil Futures Market Trend Forecast

Market Forecast for Next Week

On technical charts, WTI crude oil futures prices experienced a rise followed by a fall during the week. The main factors that boosted oil prices during the week include: first, the potential expansion of conflicts in the Middle East that could suppress crude oil supply; second, Iraq, Kazakhstan, and Russia's commitment to overcompensation for excess production in September; third, concerns that Israel might target Iran's oil industry; and fourth, the possibility of supply disruptions due to Hurricane Milton in the United States. The main factors that suppressed oil prices during the week include: first, an unexpected increase in U.S. crude oil inventories; second, the EIA monthly report's downgrade of next year's oil demand growth forecast and oil price forecast; third, the recovery of Libya's crude oil production; and fourth, Saudi Arabia's intention to increase production as planned in December. As of the 9th, WTI closed at $73.24 per barrel, up $3.55 per barrel or 5.09% from September 25th; for the week ending on the 9th, the average weekly price of WTI was $71.60 per barrel, up $0.50 per barrel or 0.70% compared to the previous week. Technically, the downward momentum of oil prices continues to weaken.

Economically, within the United States for the week, the Federal Reserve's Beige Book survey indicated that economic activity in most districts remained flat or declined in recent weeks, with employment levels generally flat or slightly rising. Although there were few reports of layoffs, some companies noted reduced shifts and working hours, unfilled announced job vacancies, or reduced employee numbers through natural attrition. Following the United States' first significant interest rate cut, market analysts believe that if the environment is one of lowering interest rates, and the Federal Reserve has expressed a desire to support employment more before the labor market weakens, then how quickly the inflation rate can reach the Federal Reserve's target will become a question.

This week, on the 26th, the United Nations stated that the eastern government of Libya has promised to lift the oil blockade, but the restart of oil fields still has a long way to go, as the agreement still faces difficult obstacles to implementation. A dispute over the leadership of the central bank led the eastern government to announce an oil blockade on August 26th. According to estimates by the agency Argus, the current crude oil production of OPEC member Libya is about 500,000 barrels per day, while the normal level is 1.2 million barrels per day.

Oil-producing countries in the Middle East, such as Saudi Arabia, have always relied on oil revenue as the main source of fiscal income. To achieve fiscal balance in Saudi Arabia, the oil price should be pushed up to nearly $100 per barrel. The IMF estimates that the Saudi crude oil price must reach $96.20 per barrel to fulfill this year's fiscal obligations. However, with the decline in oil prices, the possibility of reaching nearly $100 per barrel is slim.

On the 2nd, the 56th meeting of the OPEC+JMMC was held, reviewing the crude oil production data for July and August 2024, as well as the current market conditions. Iraq, Kazakhstan, and Russia confirmed that they have achieved full compliance and overcompensation for excess production according to the submitted schedule for September. These three countries reiterated their firm commitment to maintain full compliance with the agreement and compensation for the remaining period of the agreement.

On the 2nd, Russian Deputy Prime Minister Novak stated that the situation in the Middle East has partially affected international oil prices, and "OPEC+" member countries will make decisions to voluntarily limit oil extraction according to market conditions before December 1st of this year. He also previously stated that Russia can cope with any changes in international crude oil prices, including the situation where oil prices remain low for a long time.

Jinlian Chuang expects that next week (10.10-10.16), the geopolitical situation in the Middle East will be closely watched by the market. Since it involves the third-largest oil supplier of OPEC—Iran, the impact on the oil market is more direct. If Iran does not take action, then crude oil production and export in the Middle East will not be affected, and oil prices will also fall accordingly. Overall, international oil prices may show a volatile trend under the influence of this uncertain geopolitical factor.