On January 4, international crude oil futures fell sharply. The settlement price of the main contract of US WTI crude oil futures was 72.84 dollars/barrel, down 4.09 dollars or 5.3%. The settlement price of the main contract of Brent crude oil futures was 77.84 dollars/barrel, down 4.26 dollars or 5.2%. The oil price recorded a significant decline for two consecutive trading days, and the cumulative decline of WTI and Brent crude oil exceeded 9%. The underlying reason for the decline in oil prices is that the market's concern about the bleak global economic outlook has led to the expected decline in crude oil demand.

Macroscopic: The expectation of economic recession remains unchanged, and the tightening policy of the Federal Reserve may continue

In the early morning of January 4, the minutes of the recent meeting released by the Federal Reserve showed that the Federal Reserve was still committed to fighting inflation and intended to return the inflation rate to the target range of 2%, which indicated that interest rates might remain high for a period of time until there was clear evidence that the consumer price index was declining. And according to the data of CME Group, the Federal Reserve is expected to approve a 25 basis point interest rate increase at the meeting ending on February 1. The continued tightening of the monetary policy of the Federal Reserve has greatly increased the risk of the United States and the major developed economies in the world falling into recession, which in turn depresses fuel demand and puts pressure on oil prices.

On Wednesday, the American Petroleum Institute (API) said that US crude oil stocks and gasoline stocks climbed last week. As of December 30, the crude oil inventory has increased by about 3.3 million barrels and the gasoline inventory has increased by about 1.2 million barrels. The crude oil inventory is expected to record a significant increase for two consecutive trading days.

At the same time, the output of OPEC+ in oil producing countries also showed signs of increase. An investigation released on Wednesday said that although OPEC+ had reached an agreement to significantly reduce production by 2 million barrels to support oil prices, the output of OPEC+ might increase in December. The survey shows that OPEC+ oil production last month was 29 million barrels per day, an increase of 120,000 barrels per day compared with November. At the same time, Saudi Arabia, the number one OPEC+ oil producer, may continue to reduce the price of light crude oil to Asia in February. This month's price has been set at the lowest point in the last ten months, which also shows the risk of oversupply and casts a shadow on the oil market.

In the near future, the winter snowstorms in the United States are still fermenting, causing frustration in the local aviation industry. The cancellation of large areas of flights has caused serious damage to the aviation coal market, but also has a negative impact on self driving travel, and the demand for gasoline has been suppressed; In addition, the snowstorms in many places reduced the crude oil processing capacity in North America, resulting in the accumulation of crude oil, and then suppressed oil prices.

In the medium and long term, the risk of the global economy falling into recession in 2023 is increasing. The inflation level of western developed economies remains high, and it is difficult to tighten monetary policy or withdraw in the short term, which will harm the global economy. At the same time, the Asian region is also facing a test. With the opening of epidemic control measures in some countries and concentrated outbreak, it may be difficult to effectively boost demand in the short term. The economic data released by China in December also performed poorly, and the economic recovery may be delayed.

The short-term supply pressure is heavy, and the demand side is also under great pressure. The oil market may maintain a weak trend in the near future. In the medium and long term, the demand side is facing negative macroeconomic feedback suppression, while the supply side, with the OPEC+ production restriction policy or adjustment efforts increasing, the impact of Russia's oil export decline plays a role, the supply and demand will seek to rebalance, and the oil price is still hopeful to return to a relatively high level.

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