Crude oil: emotional repair brings resonance The center of gravity of oil prices has shifted upward

1.
On Friday (November 4), the main WTI contract closed at $92.
6 / barrel, a weekly increase of 4.
77%; Brent's main contract closed at $98.
75 a barrel, up 4.
87% on a weekly basis; The SC2212 contract closed at 718.
1 yuan / barrel, with the weekly center of gravity shifting
significantly upward.

2.
From the perspective of fundamental data, the slowdown in OPEC production in October has greatly supported market confidence in production cuts, of which the 10 OPEC member countries participating in the production cut agreement crude oil production is 1.
36 million b/d lower than the target output, the target output is 26.
689 million b/d, while the actual output is only 25.
33 million b/d
.
In November, whether OPEC production can really fulfill the production reduction depends on whether Saudi Arabia and the United Arab Emirates complete the production reduction in accordance with the agreement, and whether Russia will reduce production, and the support from the supply side is strong
.

3.
U.
S.
inventories are still at low water levels, and strong export demand makes aggregate demand resilient
.
The U.
S.
Strategic Oil Reserve fell 1.
93 million barrels weekly to 399.
792 million barrels in the week ended Oct.
28, the lowest
since the week ended May 18, 1984.
U.
S.
gasoline inventories are 3.
6% lower than a year earlier; 6% lower than the same period in the past five years; Distillate inventories are 16% lower than a year ago and 19%
lower than the same period over the past five years.
Supported by low inventory levels, it is difficult for oil prices to fall
sharply.

4.
From a macro perspective, the Fed's November interest rate hike boots landed, and the subsequent interest rate hike or a slight easing caused by market worries eased, Friday's non-farm payrolls data was also better than expected, this week focus on whether inflation data showed a high level of sharp decline, the overall will guide policy expectations to change the margin, in addition to the impact
of the US mid-term election results on November 8.
From the perspective of the collective performance of commodities, it can be positioned as a phased rebound rather than a reversal, because the decline in commodity resonance in the early stage led to the market, and under the pessimistic expectations of market consistency, the overall price center of gravity of commodities shifted downward, resulting in a significant narrowing of product-side profits and continuous destocking
.
After the macro margin improves, the repair of pessimistic expectations has led to a replenishment mentality in the market, and the increase in speculative demand has led to a resonant rebound of commodities, but it is still necessary to pay attention to the strength
of subsequent real demand support.

5.
The market expects the US CPI data to be 8% in October, down from September, but energy prices rose
in October compared with September.
Judging by Powell's speech, Powell's speech dashed hopes that the Fed would shift to more accommodative policy, and the rate hike target would be higher and last longer
.
The current market outlook is that the rate hike may continue until March next year, and the target rate may exceed 4.
5%.

6.
From the perspective of crude oil, in the context of a strong dollar, oil prices will weaken, and once the dollar weakens, the price of risk assets such as crude oil will be supported, but not absolutely
.
Overall, the weakening of the US dollar high will make the trend of oil prices more
volatile.
The crowding out effect of high interest rates on demand, due to the lag in the impact of interest rate hikes on demand, demand constraints drag oil prices again, so there are significant constraints
on high oil prices.
Therefore, the short-term oil price trend is volatile, but the high point is still difficult to effectively cross, it is necessary to pay attention to the follow-up EU sanctions on Russia, whether it leads to an emergency on the supply side of the market, short-term oil distribution is still under pressure
at the $100 mark.