After falling below $100, where will crude oil go?

Expectations of overseas recession coupled with the high US dollar index have made global commodity prices increasingly "cold"
.
On July 12, overseas commodity markets underwent another large-scale correction
.
Crude oil bore the brunt, and U.
S.
oil and crude oil both fell below the $100 integer mark
.
Since peaking in mid-June, international oil prices have retreated by about 20%
in the past month.

The domestic futures market and refined oil prices retraced
simultaneously.
The main contract of Shanghai crude oil futures fell nearly 6% in the session yesterday, closing at 658.
5 yuan / barrel; Refined oil prices were lowered yesterday, and No.
92 gasoline returned to the "8 yuan era"
in some areas.

In the face of high inflation, major overseas economies are raising interest rates non-stop
.
Aggressive monetary tightening has made the outlook for overseas economies increasingly worrisome, and "recession trading" has become the main pricing logic
.
The overseas economic recession has restricted the growth rate of commodity demand, and varieties such as crude oil and natural gas, which are highly related to the macroeconomic situation, have been impacted
.

"Negative feedback on consumption and monetary policy brought about by high inflation in the United States may drag overseas economies into a new round of recession
.
" Huang Wentao, chief economist of CSC, said
.

The Fed's rapid interest rate hike has also caused large fluctuations
in international exchange rates.
On July 12, the dollar index hit a new 20-year high of 108.
56 points, and on the same day the euro fell below parity against the dollar for the first
time in nearly 20 years.
From a currency perspective, most of the world's commodities are priced in US dollars, and price fluctuations are usually negatively correlated
with the trend of the US dollar index.

Huang Wentao said that the rise in risk aversion in overseas markets is positive for the dollar
.
Given the high level of overseas recession expectations, once confirmed, the dollar index still has a large upside, and the center has entered at least the 110-115 point range, and the possibility
of challenging the 2000 high of 120 points is not excluded.

Although the downturn of the overseas economy and the strength of the US dollar index have become the consensus of most institutions, the market's forecast of the downside of oil prices in the future market is still relatively cautious, mainly due to the uncertainty
of the supply side.

Guo Zhaohui, chief commodity analyst at CICC, said that the recent overseas recession expectations have intensified, and the current supply-side potential reduction impact may be partially offset
by the expectation of slowing demand growth.
"But in the medium term, supply risks in the crude oil market may remain
.
"

According to Guo Chaohui's calculations, the marginal production cost of shale oil in North America is between $70 per barrel and $80 per barrel, which can be used as a fundamental fair price
without considering supply risk.
If short-term market sentiment swings lead to a supply risk premium being cleared, crude oil prices could find strong support
around $80/b.

The Organization of the Petroleum Exporting Countries (OPEC) released its latest monthly market report on Tuesday, providing its first outlook
for the oil market in 2023.
OPEC expects global crude oil demand to grow by 2.
7 million barrels per day year-on-year next year, while supply outside OPEC will increase by only 1.
7 million barrels per day, which means that global oil demand growth will exceed supply growth next year, and the tight situation in the crude oil market is expected to be difficult to ease
.

However, it is worth noting that OPEC's above outlook is based on two assumptions: first, the Ukraine crisis will not escalate; Second, risks such as rising inflation will not have a serious impact
on global economic growth.
But it is clear that these two factors are precisely the most uncertain variables
for the future.