In the past week, Western sanctions on Russian oil officially came into effect. Oil prices responded relatively calmly, falling instead of rising. However, Russian countermeasures are already on the horizon.

This week, oil prices suffered their largest weekly decline in six months. WTI crude oil fell by 11.20 to 71.02 US dollars per barrel, a new closing low since December 20 last year; Brent crude oil fell by 11.06 to 76.10 US dollars per barrel, a new low since December 24 last year.

In the news, Russian President Vladimir Putin said on Friday that Russia will not export oil to countries that impose price restrictions on it, and he will sign a decree in the near future to respond to price limit orders from Western countries.

Putin said that the price ceiling set by the G7 will not have any negative impact on the Russian budget and that Russia will not suffer economic losses due to the price limit order because the threshold of $60 per barrel is close to the current market for Russian crude oil price. Russia's gross domestic product (GDP) is expected to decline by 2.9 this year, and the decline is expected to be approximately 0.9 in 2023. Overall, Russia's economic situation will improve further.

Putin stressed that Russia may cut oil production in response to the Group of Seven (G7) setting a price ceiling on Russian oil exports. "I'm not saying this is a decision now, but if necessary, we will consider possible production cuts."

This news caused international oil prices to rise significantly during the session on Friday, and U.S. oil futures prices rose sharply. At one point it reached 2. However, there was news later in the day that Keystone, an important oil pipeline across the United States and Canada, plans to partially restart this Saturday after being temporarily shut down due to an oil pipeline leak on Thursday. Affected by this, oil prices turned lower during the session.

As for the energy export game between the West and Russia, Li Jie, a senior researcher in the energy and chemical industry of CCB Futures, believes that this year’s conflict between Russia and Ukraine has made the market worried that Russia’s oil supply may be significantly reduced. However, as of the end of the third quarter, The decline in Russian supply has been relatively limited. Starting in December 2022, the G7 will impose a price ceiling on Russian oil exports. The EU will also impose an embargo on Russian maritime crude oil transportation. From February 2023, refined oil transportation will also be subject to sanctions. It is expected that Russian supply will experience a marginal decline and continue to Tighten the supply side of crude oil.

Data released by the U.S. Commodity Futures Trading Commission (CFTC) show that in the week ended December 6, speculators’ net long positions in Brent and WTI crude oil decreased by 7,232 contracts to 267,749 contracts, a record Three-year low. The net long position of NYMEX WTI crude oil held by speculators increased by 5,688 contracts to 171,277 contracts. Speculators' net long position in NYMEX gasoline fell to 52,612 contracts, a seven-week low, and their net long position in NYMEX diesel fell to 20,706 contracts, a new low in more than two months. The net long position of NYMEX natural gas held by speculators fell to 25,831 contracts, a new low in the past six weeks.

Talking about the current fundamentals of the crude oil market, Zheng Mengqi, an energy researcher at Hizheng Futures, said that on the supply side, U.S. crude oil production increased slightly, and OPEC maintained its production cut of 2 million barrels per day and did not expand the current The extent of production cuts, and the market is concerned about the implementation of its production cuts, the EU has set a price ceiling for Russian oil at US$60/barrel, which is higher than the current discount of more than US$50/barrel sold by Russia, which will have little impact on Russian oil supply. On the demand side, refined oil cracking has fallen back from its high level, gasoline cracking is at normal levels in previous years, and U.S. refinery capacity utilization has rebounded seasonally and is slightly higher than the same period in previous years. On the demand side, refined oil cracking has fallen back from its high level, gasoline cracking is at normal levels in previous years, and U.S. refinery capacity utilization has rebounded seasonally and is slightly higher than the same period in previous years. With the implementation of the “New Ten Measures” in China, demand will gradually recover in the medium term. On the inventory side, U.S. commercial crude oil inventories have fallen sharply, while gasoline and distillate inventories have risen sharply, exacerbating market concerns about terminal demand.

Looking ahead to the market outlook, Li Jie said that if China's demand can recover beyond expectations after the second quarter of next year, it is expected to further push up oil prices.

Specifically, according to Li Jie, in terms of OPEC, the production capacity problem of small and medium-sized oil-producing countries will continue to be highlighted in 2022. Saudi Arabia has also expressed its lower tolerance limit for oil prices. It is expected that OPEC supply will not increase significantly. If oil prices fall more than expected, the possibility of Saudi Arabia tightening supply again cannot be ruled out. U.S. crude oil production will increase slowly in 2022, and due to capital expenditure constraints, the increase is expected to be around 800,000 barrels per day in 2023. In the second half of 2022, the United States will face greater inflationary pressure. The Federal Reserve raised interest rates by 75bp four times in a row, which put downward pressure on the prices of crude oil and other bulk commodities. In October 2022, the U.S. CPI fell below 8, and the market's expectations for a slowdown in interest rate hikes by the Federal Reserve have increased. If inflationary pressure falls as expected in the later period, the macroeconomic outlook may receive certain support. From the perspective of crude oil itself, the increase in demand in 2023 will mainly be concentrated in jet fuel. Looking by region, Asia-Pacific and the Americas will continue to lead demand growth. In terms of refining profits, the IEA predicts that the world's new refining capacity in 2023 will be 40% more than in 2022, which will further alleviate the global shortage of refined oil, especially diesel. It is expected that the global refining profit center will move closer to the average in 2023. In terms of the balance sheet, although the uncertainty of the economic outlook has hindered the recovery of demand to a certain extent, driven by OPEC's production cuts, the market is likely to still destock in 2023.

“From a macro perspective, U.S. CPI data will be released next Tuesday, and the Federal Reserve interest rate decision will be held next Thursday. The market expects that the Federal Reserve will continue to raise interest rates by 50 basis points. The economic slowdown and demand caused by a sharp increase in interest rates will The decline is expected to suppress crude oil prices. Domestic demand may decline in the short term, but overall, crude oil prices will be weak in the short term.

Yang An, the energy and chemical research team leader of Haitong Futures, believes that against the background of the weakening US dollar, the overall performance of commodities has recovered significantly. In the domestic market, against the backdrop of policy support for real estate, black, non-ferrous and chemical industries have Once there is a general recovery, the continued plunge in oil prices will not last long. As strong expectations and weak reality gradually recede, there is a high probability that the crude oil market will recover. “In terms of supply and demand prospects, the crude oil market will not experience great oversupply pressure before the first half of 2023, but there are still some uncertainties on the supply side. In particular, the determination of Saudi Arabia and Russia to jointly protect oil prices cannot be underestimated. After the oil price plummeted, After 30, U.S. oil prices are very close to the previous target price range for the United States to seek to replenish strategic crude oil inventories. There is a certain risk in continuing to be overly bearish on oil prices. As pessimism is vented, the oversold recovery market may return to the market at any time. Follow-up attention. The degree of recovery of market confidence."