SunSirs: International Crude Oil Futures Closed Lower, Impacting the Energy Chain

On October 24th, international crude oil futures closed lower. The settlement price for the December contract of US WTI crude oil futures was $61.50 per barrel, down $0.29 or 0.5%. The settlement price for the December contract of Brent crude oil futures was $65.94 per barrel, down $0.05 or 0.1%.

The clear decline in crude oil futures settlement prices (WTI down 0.5%, Brent down 0.1%) directly reflects market concerns about the demand outlook. Spot prices will be under pressure, and expectations of ample supply in the short term are strengthening, potentially leading to a continued decline in the main futures contract.

As a direct downstream consumer of crude oil, cost support is weakening. Combined with the settlement price of the 2603 contract for petroleum asphalt futures at 3251 RMB/ton (a single-day drop of 30 RMB), spot refinery profits may narrow, significantly increasing downward pressure on futures prices.

The decline in crude oil costs weakens support for refined oil pricing, but the offsetting effect of winter heating demand needs to be considered. Spot market purchasing sentiment may turn cautious, while there is currently no direct data on the futures market, resulting in a neutral to slightly bearish short-term impact.

Similar to the diesel market, the decline in crude oil prices lowers expectations for crack spreads. Spot wholesale prices may follow suit with a correction, but resilient travel demand may buffer the decline, resulting in a mild overall negative impact.

The cost of ethylene-based PVC is affected by crude oil price transmission, but the dominance of the calcium carbide method weakens this correlation. Spot prices depend more on building material demand; the decline in crude oil prices only constitutes a marginal negative, and futures do not show a direct correlation.

As a petrochemical intermediate, propylene prices are positively correlated with crude oil. The decline in crude oil prices may suppress acetone spot costs, but supply and demand balance and imported supplies have a greater weight in influencing prices.

The decline in crude oil prices indirectly affects the benzene chain, but phenol spot prices are more driven by plant operating rates. Current industry inventory is neutral, and crude oil fluctuations only bring short-term negative sentiment.

Liquid ammonia production mainly uses natural gas as a raw material and has a low correlation with crude oil. Spot prices mainly depend on fertilizer demand and gas price fluctuations; the current decline in crude oil prices has a neutral impact on it.

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