The market is still in the "TACO" trading phase, with oil prices likely to fluctuate in the short term due to strong uncertainties on both the macro and geopolitical levels. The trading rhythm is difficult to grasp, and caution is needed when entering the market. As geopolitical risks decline in the fourth quarter, the focus of crude oil prices may continue to decline.

On the evening of the 14th, international oil prices continued to decline. Before the US stock market opened, WTI crude oil futures fell by 3%, to 57.328 US dollars per barrel, hitting a new low since May 8th; Brent crude oil futures fell by 2.80%, to 61.547 US dollars per barrel.

At the close, WTI crude oil futures fell 1.33% to $58.70 per barrel. Brent crude oil futures fell 1.47% to $62.39 per barrel.

In terms of news, Russia's seaborne crude oil exports have risen to a 28-month high in the past four weeks. Due to factors such as rising production and Ukrainian attacks on Russian refineries, some Russian crude oil has been forced to be exported to the terminal. According to ship tracking data compiled by foreign media, the average daily crude oil export from Russian ports over the four weeks ending on October 12th was 3.74 million barrels, reaching the highest level since June 2023.

In addition, the International Monetary Fund (IMF) released its latest "World Economic Outlook" on October 14th local time. The IMF said that the global economic growth rate is expected to slow to 3.2% in 2025 and further to 3.1% in 2026. The sharp rise in US tariffs is becoming the most important factor driving global uncertainty.

Reporters have learned that the current crude oil market is facing multiple pressures, including an increase in supply, a dim outlook for demand, and a cooling of geopolitical risks.

"First, OPEC+ decided to increase production by 137,000 b/d in November to gradually cancel the previous 1.65 million b/d production cut plan. At the same time, the supply of crude oil from Brazil, Guyana and other countries continues to rebound. Secondly, the warming of the Sino-US trade friction when the global oil demand enters the seasonal consumption off-season has intensified the market's pessimistic expectations for global economic growth and crude oil demand. In addition, the ceasefire agreement in Gaza and Israel's beginning to withdraw from Gaza have significantly reduced the geopolitical risk premium of crude oil," said Zhao Ruichen, crude oil researcher at the Commodity Research Institute of Haitong Futures.

Fu Xinwei, a crude oil analyst at Zhengxin Futures, said the increase in production by OPEC+ has led to an increase in supply pressure in the crude oil market. Currently, crude oil has entered the seasonal accumulation stage, and with the increasing inventory pressure, the support for the downside of the oil price has weakened.

"Of note is that the intention of OPEC+ to increase production to protect market share has always been a 'Damocles sword' hanging over the international oil price. At the production meeting in October, Saudi Arabia and Russia had differences over the scale of production increase, with Saudi Arabia advocating a large increase in production to compete for market share." Fu Xinwei said.

From a macro perspective, Fu Xinwei said that the U.S. tariff policy, which is constantly changing, may further reduce crude oil demand, and the U.S. government's "shutdown" has also exacerbated market concerns about the slowdown in global economic growth.

In the view of Dong Chao, a senior analyst at Shenwan Hongyuan Futures' Crude Oil Research Center, the current decline in oil prices is caused by a variety of factors. On the one hand, OPEC+ continues to increase production; on the other hand, as the demand peak season ends, the market is facing the pressure of insufficient demand. In addition, the crude oil market is also affected by the Fed's interest rate cuts. Although the Fed has started cutting interest rates, the pace of rate cuts is not up to expectations, which instead suppresses oil prices. The risk of global trade friction is also not to be underestimated. The huge tariffs covering almost all categories of goods and the shipping costs will seriously disrupt the efficiency of the global supply chain, and the slowdown or interruption of manufacturing and logistics activities will directly reduce the demand for crude oil and downstream petrochemical products.

At present, the global crude oil market is oversupplied and it is difficult to change this situation, said Dong Chao, adding that the IEA expects a supply glut of more than 2 million barrels per day in the fourth quarter.

In fact, the current oversupply pattern in the oil market has begun to reflect in high-frequency data. Fu Xinwei introduced that the data published by the EIA shows that as of October 3, the US commercial crude oil inventory has increased for two consecutive weeks, and has begun to enter the seasonal accumulation stage in the fourth quarter. It is worth noting that the oil market has not yet shaken off the extremely low inventory state, so the oversupply has not significantly affected the price. In addition, according to the October EIA Energy Outlook Report, the OECD crude oil inventory has been continuously accumulating since mid-year, and it is expected that the accumulation cycle will continue until the end of 2025. On this basis, the increase in supply by OPEC+ will inevitably intensify the global oversupply pressure.

"In the context of oversupply clouds and lack of strong support on the demand side, the weak trend of international oil prices is difficult to reverse in the short term, and many institutions predict that international oil prices may further decline in the fourth quarter," Zhao Ruichen said. Looking ahead, the focus needs to be on the production meeting of OPEC+ to be held on November 2. Although OPEC+ currently insists on increasing production, it also emphasizes in its announcement that it will "maintain full flexibility", so whether OPEC+ will adjust or even suspend its production increase plan after the continuous decline in oil prices will be the focus of the market in the short term. The macro environment will also have a significant impact on the crude oil market, and the subsequent development of the Sino-US trade negotiations, the situation of the US federal government "shut down" and the path of the Federal Reserve's interest rate cuts will be the focus of the market in the medium term.

Fu Xinwei said that the market is still in the "TACO" trading stage, oil prices may fluctuate in the short term, macro and geopolitical uncertainties are strong, it is difficult to grasp the trading rhythm, and caution is needed to enter the market. As geopolitical risks decline in the fourth quarter, the focus of crude oil prices may continue to decline.

As an integrated internet platform providing benchmark prices; On October 21, the benchmark price of WTI crude oil by SunSirs was $57.15 per barrel, down 8.37% from the beginning of this month ($62.37 per barrel).

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