During the holiday period, international oil prices have surged continuously. West Texas Intermediate (WTI) crude oil futures once achieved three consecutive increases, reaching a high of $74.09 per barrel, setting a record high in over four weeks. Brent crude oil futures also experienced five consecutive increases, touching a high of $77.99 per barrel, with weekly gains exceeding 7%.

This trend is in stark contrast to the persistently low oil prices in mid-September. In September, the International Energy Agency (IEA), the U.S. Energy Information Administration (EIA), and the Organization of the Petroleum Exporting Countries (OPEC) all downgraded their global crude oil demand forecasts for 2024. This adjustment is mainly based on the pressure on consumption caused by economic slowdown and the accelerated transition of oil to new energy sources.

Nanhua Futures energy and chemical analyst Liu Shunchang believes that the intensification of geopolitical conflicts in the Middle East has once again raised market concerns that crude oil production and exports may be substantially affected. The short-term geopolitical tensions in the Middle East have driven oil prices to rise sharply, and in the long term, attention should be paid to OPEC+ supply and U.S. macroeconomic data.

In terms of supply, OPEC maintains its production increase pace, with forward OPEC supply tending to increase. On the demand side, the fourth quarter is the season for refinery maintenance, with increased maintenance losses in refineries from September to October. It is expected that the intensity of autumn inspections may be higher than in previous years due to the decline in refinery profits. The weakening of manufacturing PMI in Europe and the United States has also reinforced the market's confirmation of insufficient demand.

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Liu Shunchang analyzed that OPEC+ maintained its oil production policy unchanged at the meeting on October 2nd, which means increasing production by about 200,000 barrels per day from December and for the following year. On the other hand, the U.S. non-farm employment and unemployment rate data showed that the employment data for July and August were significantly lower than expected, strengthening market concerns about U.S. economic growth and driving oil prices to fall. Attention should be paid to the short-term disturbance of oil prices by U.S. non-farm data.

In terms of macroeconomics, Wuchan Zhongda Futures analysis pointed out that the official start of the Fed's interest rate reduction cycle means that the economy is showing signs of weakness. At the beginning of the interest rate reduction, crude oil volatility increases, and then enters a more coherent trend. In the fourth quarter, the market is more concerned about the pace and magnitude of U.S. interest rate cuts, and key data such as non-farm employment before the interest rate meeting will affect the market's expectations of whether the economy is in recession.

The probability of crude oil demand decline in the fourth quarter is relatively large. Wuchan Zhongda Futures analysis suggests that the marginal variable to pay attention to is domestic economic stimulus policies. Since September 24th, the country has issued a series of monetary and fiscal policies to stimulate economic growth. These policies involve improving liquidity, maintaining stability in the real estate market, and supporting the securities market in various aspects; increasing the intensity of fiscal and monetary policy counter-cyclical adjustments to ensure necessary fiscal expenditures; and promoting consumption confidence through measures to improve overall social consumption capacity, focus on economic structure upgrading, and improve people's livelihoods. Attention should be paid to the stimulating effect of China's economic policies on terminal demand.

Liu Shunchang believes that the crude oil market is expected to maintain a situation of internal strength and external weakness, with domestic policy intensification continuously driving demand expectations, and domestic oil prices are expected to be relatively strong. The impact of geopolitical tensions in the Middle East and U.S. non-farm data will increase the volatility of the crude oil market.