On December 13, the settlement price of the main contract of the U.S. WTI crude oil futures was $75.39 /barrel, up $2.22 or 3.03%. The settlement price of the main contract of Brent crude oil futures was 80.68 dollars/barrel, up 2.69 dollars or 3.45%. As of Wednesday, international crude oil futures recorded significant gains for two consecutive trading days, with WTI and Brent crude oil both rising by more than 6%. The oil market staged a rebound at the bottom, mainly because the US dollar continued to fall and short-term supply tension worries overshadowed the pessimistic expectations of demand.

First of all, the main reason is the favorable supply side in the near future. Last week, the US Canada oil pipeline Keystone leaked, causing about 14000 barrels of crude oil to spill in the United States, making it one of the largest oil spills in the United States in the past decade. The transportation capacity of this pipeline is more than 600,000 barrels/day, which can be called the "artery" of oil transportation in the United States. The temporary supply interruption supports the rise of oil prices. At present, the key pipeline is still shut down. Although there is news that it will resume operation on December 20, the maintenance progress will be affected by the bad weather, which remains to be further observed.

In addition, from a macro perspective, the US dollar continued to decline, bringing benefits to risky assets. The US dollar index fell sharply on Tuesday, after data showed that the growth of US core consumer prices in November was lower than expected, which further strengthened the expectation that the Federal Reserve would slow down the pace of interest rate increase. It gives the capital market a chance to take a breather. The weakening of the US dollar makes the valuation of crude oil denominated in US dollars higher in a disguised way, and the oil price has the power to rise.

On the demand side, although the risk of global economic recession is still difficult to get rid of. However, China's demand recovery is expected to further strengthen. With the gradual liberalization of China's epidemic prevention measures, fuel demand is expected to rebound. Previously, Goldman Sachs also held an optimistic view on China in 2023 in its report. However, this may be a relatively long process. Demand is still affected by policies in different regions, and the start may be relatively slow.

Since December, oil prices have continued to fall, recording a decline in six trading days. WTI and Brent crude oil both fell by about $10. The results of the OPEC meeting of oil producing countries were released at the beginning of this month, which failed to further reduce production; As well as the EU's oil price limit policy for Russian seaborne oil has been implemented, but in the short term, it is virtually non-existent. The oil price fell to the annual low against the background of demand depression at the far end. It has completely returned to the level before the Russian Ukrainian conflict. But can this rebound change the pattern of empty oil market? Can the market reverse?

In the future, the crude oil analysts of the Business Society believed that, on the macro level, the decline of the core inflation of the US has strengthened the reason for the Federal Reserve to slow down the pace of interest rate increase, but the terminal interest rate may tend to exceed 5%, which is still a pressure on the market. In addition, it is hard to be optimistic about the supply and demand fundamentals in the future. Such news as the closure of the US Canada pipeline can only bring short-term benefits to the supply side. In the medium and long term, it is difficult for OPEC to have a too radical production reduction policy. After G7 sanctions on Russian oil come into effect, Russian oil may seek more Asian buyers and other opportunities. The risk on the demand side is also approaching step by step. The expectation of global economic recession remains unchanged, and the oil market is still facing fundamental pressure in the future. Therefore, it is expected that the oil price will not rule out the possibility of further bottoming, and the future market rate will remain volatile.

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