Recently, international oil prices have experienced the largest single-day drop since mid-March, and the prices of WTI and Brent crude oil futures have fallen below the important psychological support level of $100 one after another. The rising U.S. bond risk aversion drove the U.S. dollar index to jump, triggering panic in the market, and U.S. stocks and risk assets fell.
　　In the first half of the year, oil prices rose sharply under the combined effect of the Russian-Ukrainian conflict, geopolitical issues, and OPEC production cuts, showing high volatility. The overall transaction activity of SC crude oil further increased. Data shows that in the first half of this year, the average daily trading volume of SC's main contracts exceeded 180,000 lots, an increase of 43% from the daily average in 2021.
　　Geographical problems have led to increased uncertainty on the supply side of crude oil, and the market has placed greater expectations on OPEC, hoping that it will stabilize supply and increase production significantly. However, OPEC's production was far less than expected. It planned to increase production by 2.5 million barrels per day from January to June, but the actual production increase rate was only 20%. At the same time, the stability of OPEC's internal supply has been impacted, and oil-producing countries such as Libya and Nigeria have been affected by geopolitical problems, and their output has declined to varying degrees. The U.S.-Iran negotiation has been inconclusive for a long time, and the sanctions on Russian energy have exacerbated the supply tension.
　　Under the influence of the epidemic, global demand is mismatched. In the first half of the year, U.S. demand was strong, superimposed on the peak demand season from July to September, inventory continued to be low, refined oil broke the previous pricing boundary, and the focus continued to move upward. As of last week, the U.S. strategic oil reserve stood at about 498 million barrels, the lowest since 1986, data showed. Commercial crude oil inventories are at about 416 million barrels, gasoline inventories total about 222 million barrels, and distillate inventories are about 112 million barrels. Among them, strategic oil reserves fell by 95.51 million barrels, or 16.1%, compared with the beginning of the year; gasoline inventories fell by 19.14 million barrels, or 8%; distillate stocks fell by 16.98 million barrels, or 17%, compared with the beginning of the year. With the continuous release of the U.S. strategic petroleum reserve, the operating rate of U.S. refineries has hit a new high since the epidemic, and the destocking of products has been evident, verifying the firmness of U.S. demand.
　　Currently, the deep back structure of oil prices means that reality is strong but expectations are weak. Recession pricing has pushed demand out of peak season logic ahead of schedule. Relevant forward-looking indicators for the euro zone now show signs of recession in the euro zone as the cost of living remains high and consumers remain vigilant. Compared with commodities such as metals, oil prices have been relatively strong due to geopolitical games. However, in a complex situation, crude oil is not immune to it. Therefore, the compensatory decline in oil prices will drag down the entire energy and chemical sector, but the decline in downstream products will be milder than the decline in raw materials.