WTI crude oil falling below $90 suggests weaker demand industry: the Chinese market may usher in more opportunities

Since June, international oil prices have changed their previous strengths, from a stage high of $118 / barrel to a phased decline, and have now fallen below the $90 mark
.
A number of analysts told the "Securities Daily" reporter that based on the expectation of slow global economic recovery and weaker demand, including the suppression of inflation by the Fed's interest rate hike, international oil prices have recently shifted their center of gravity downward; However, the Chinese market may usher in more opportunities, on the one hand, because the decline in oil prices has reduced the operating costs of China's oil imports and petrochemical industry, and on the other hand, it has provided opportunities
for oil reserves.

Multiple bearish superpositions suppress oil prices

On August 9, the WTI crude oil main September contract remained running below the $90 mark, which is also the second time since mid-July that it has broken below the $90 mark; The downward focus of international oil prices has caused investors to have pessimistic expectations
for overseas markets.

In fact, since June, international oil prices have been in a phased downward trend, during which they have hit a low of
$99.
66, $88.
24 and $87.
01.
As of press time, the WTI crude oil September contract closed at $89.
61 / barrel, still running
below the $90 mark.

Many analysts believe that the factors that have recently led to the weakness of international oil prices are many, including the suppression of inflation by the Fed's interest rate hikes, the slow recovery of overseas economies, etc.
The superposition of multiple negative factors has put oil prices under pressure
.

Meng Yuan, general manager of the Minmetals Futures Research Center, told the Securities Daily reporter that the current round of international oil prices from the high level is mainly affected by factors such as demand worries and interest rate hikes by the Federal Reserve
.
"Overseas markets are increasingly worried about the recession, and European and American countries have successively opened interest rate hike models, especially the Federal Reserve's aggressive interest rate hikes have triggered a general decline in
commodity prices.
" In addition, the United States has tried to ask shale oil companies to significantly increase production and hope that oil companies will take action to reduce oil prices, which has also increased the downward pressure
on crude oil prices.
”

Sui Xiaoying, head of the petrochemical team of the Founder Medium-term Futures Investment Consulting Department, told the Securities Daily reporter that the center of gravity of WTI crude oil futures prices has been moving downward, mainly due to the expected macroeconomic recession and the weakening of oil consumption
.
"With the high level of global inflation and the continuous interest rate hikes in major economies, global economic growth is expected to slow down significantly, such as the negative growth of the US economy for two consecutive quarters, the inversion of long-term and short-term yields on US Treasury, and the continuous decline in manufacturing PMI data in major economies such as Europe and the United States, all indicate that the future overseas market economy may be in recession, which will directly suppress oil demand
.
"

The reporter learned that for the recent successive pullbacks in international oil prices, a number of institutions have launched heated discussions on the logic of the current dominant market, one side believes that this is caused by the "fever" of inflation in overseas markets, and the other side believes that the fundamental is the adjustment
of supply and demand.
An Ziwei, senior analyst of energy at the Orient Securities Derivatives Research Institute, told reporters that the recent further decline in international oil prices is mainly due to the pressure
on weak demand expectations.

Operating costs in the petrochemical industry may be reduced

China is an importer of crude oil and has a foreign dependence of more than 70%.

Many analysts believe that the recent decline in international oil prices may provide more opportunities
for the Chinese market.

"The impact of the decline in oil prices on the Chinese market is mainly reflected in the petrochemical industry and transportation
.
" Meng Yuan told reporters that as the world's most important energy consumer, the decline in oil prices will bring more opportunities to Chinese enterprises, such as directly reducing the cost of oil imports and petrochemical industries, and through the industrial chain, reducing the overall operating costs of China's economy; At the same time, the decline in oil prices will also play a certain role in stimulating China's consumption growth; In addition, it provides an opportunity
to expand oil reserves.

Sui Xiaoying believes that the current absolute price of crude oil is still at a relatively high level, and the market wait-and-see sentiment is still relatively heavy
.
When oil prices fall back to around $70 to $80 during the year, procurement efforts can be appropriately increased
.
"The current macroeconomic recession expectations and weaker oil consumption in overseas markets are still the main logic affecting oil prices in the medium and long term, and it is expected that the center of gravity of oil price operation will continue to move down, and in the short term, facing uncertainties such as the Federal Reserve's monetary policy, it is expected that the disk surface will maintain a high level of shock, waiting for relevant news to land
.
"

"China's crude oil imports bottomed out in July, but they are still lower than previous years, and the decline in oil prices will help release
import demand.
" An Ziwei said that from the supply side, the OPEC meeting confirmed a slight increase in production of 100,000 barrels per day in September, maintaining a cautious attitude, but OPEC is more cautious
about the release of limited spare capacity due to the expected shift in market demand.
"The low level of global crude oil inventories and the decline in spare capacity are medium- and long-term support factors for the crude oil market, and in the short term, the weakening of the demand margin is the core concern of the current market, and it is expected that short-term prices will fluctuate to find the bottom
.
"

It is worth mentioning that in the context of weak international oil prices, the domestic refined oil market has also adjusted
.
On August 9, the website of the National Development and Reform Commission announced that according to the recent changes in oil prices in the international market, according to the current refined oil price formation mechanism, since 24:00 on August 9, the domestic gasoline and diesel prices (standard products, the same below) have been reduced by 130 yuan and 125 yuan
per ton respectively.
PetroChina, Sinopec, CNOOC and other crude oil processing enterprises should organize the production and transportation of refined oil products to ensure stable supply in the
market.

"Although domestic oil prices are linked to the international market, the downward trend in domestic oil prices may also be terminated, mainly due to the pricing of international oil producers
.
" Meng Yuan said that some oil-producing countries raised the price of oil from Asian buyers by $9.
8 / barrel at the beginning of this month, reflecting the overseas market's optimism about China's economy and China's oil demand, and the domestic oil price trend will not fall
in conjunction with the external disk.