Crude oil: Oscillating mainly in the fourth quarter

On October 5, 2022, the 33rd OPEC+ Ministerial Meeting decided to adjust the OPEC+/OPEC/NOPEC production quota in November to 41.
85 million/25.
41 million/16.
44 million b/d, compared with October, which was 2 million/1.
27 million/730,000 b/d, triggering heated market discussions
.
For the future trend of crude oil, we should pay attention to the following aspects:

It is uncertain whether Russian production will be reduced

OPEC+ has shown a strong willingness to
maintain prices.
Despite continuous pressure from the United States, OPEC+ decided to cut production quotas by 2 million barrels per day from November and extend the production cut agreement until the end of 2023, which reflects OPEC+'s determination to stabilize oil prices and shows that OPEC+ has no willingness to increase production and wants to maintain policy consistency for at least the next year
.

The U.
S.
government has a strong willingness to
suppress prices.
Immediately after OPEC announced its production policy, the White House issued a statement saying that the US president was disappointed by OPEC+'s short-sighted
behavior of lowering production quotas.
At the president's directive, an additional 15 million barrels of strategic reserve stocks will be released next month, and the president called on U.
S.
oil companies to reduce the wholesale and retail price differentials of refined products to reduce end-consumption costs
.
Other measures that may be considered include pushing for the passage of the NOPEC bill, pushing Venezuela to increase exports, and pushing for the Iran nuclear deal
.
If the above measures are implemented, they will have the effect of stabilizing oil prices, but they all face greater political resistance
.

On the Russian side, according to the sixth round of EU sanctions against Russia, the EU embargo on Russian seaborne crude oil and refined products will start
on December 5, 2022 and February 5, 2023, respectively.
If sanctions take effect, the EU is expected to phase out 1.
5 million b/d of Russian oil imports
.
Considering the large release of China's refined oil export quota, the reduction of Russian oil products may be compressed
.
The day before the National Day, the Ministry of Commerce issued the fifth batch of refined oil export quotas, so it is uncertain whether Russian oil products will be passively reduced in the fourth quarter
.

The growth rate of global crude oil demand has been revised downward

In OPEC, OPEC's 13 members produced an average of 29.
77 million barrels per day of crude oil in September, up 146,000 barrels
per day from August.
OPEC's 10 members with quotas produced 25.
399 million barrels per day in September, 1.
35 million barrels
per day below the September quota.
Despite September output being lower than its quota, OPEC is expected to cut production by about 1 million b/d in real terms in November and December if OPEC fully meets its 2 million b/d
quota.

On the Russian side, Russian crude oil production was 10.
59 million b/d in August, about 440,000 b/d different from the beginning of the year, and production did not decrease
significantly.
It is uncertain whether Russian oil production will be passively reduced after December
.

In the United States, U.
S.
crude oil production was 12 million b/d last week, unchanged
from the previous month.
As of August, there were 4,283 wells in stock and 953 new drills
.
The total number of wells in stock is currently down in transit, and the number of new wells, although rebounded, is too small to boost U.
S.
production
.

The monthly reports of the three major institutions have lowered the growth rate
of crude oil demand.
Among them, OPEC's monthly report lowered the growth rate of global crude oil demand in 2022 by 460,000 barrels per day to 2.
64 million barrels per day, and the global crude oil demand growth rate is expected to be 2.
34 million barrels / day in 2023, compared with 2.
7 million barrels / day
previously.
The EIA short-term energy outlook report shows that global crude oil demand growth is expected to be 2.
12 million b/d in 2022, compared with 2.
1 million b/d
previously expected.
According to the US Energy Information Administration, as of October 7, 2022, total U.
S.
demand for refined products averaged 19.
952 million barrels per day, 3.
8%
lower than the same period last year.
Overall, affected by weak demand, crude oil will be dominated
by oscillations in the fourth quarter.
(Author: Ningzhen Futures)