Arbitrage Tracking: 1) Spreads: On November 21, the SC night session 1-3 month spread was -1.90 yuan/barrel, equivalent to -0.27 USD/barrel. The Brent 1-3 month spread stood at 1.01 USD/barrel, while the WTI 1-3 month spread was 0.40 USD/barrel. The SC night session-Brent front-month contract spread was +0.38 USD/barrel, and the SC night session-WTI front-month contract spread reached 4.43 USD/barrel.

2) Arbitrage: ① Valuation: At 2:30 AM on November 21, the Brent 2601 futures price was 63.50 USD/barrel, while the SC 2602 futures price was 446.9 yuan/barrel. The theoretical price for SC 2602 was calculated at 474.7 yuan/barrel, indicating a -5.9% deviation from market valuation. Based on a 7-day moving average valuation range of [-5%, 0] as normal, current valuations show slight normalization. ② Profit: The calculated landed profit for SC2602 was -29.38 yuan/barrel (-4.14 USD/barrel). ③ Spread: The SC2602-Brent2601 spread was 0.31 USD/barrel versus a theoretical spread of 4.45 USD/barrel, indicating the market spread remains below theoretical levels. (Note: Last week's Brent front-month was 2601; SC front-month was 2601; "M" represents current November)

3) Summary: Regarding monthly spreads, while oil prices declined consecutively last week, near-term Brent spreads did not weaken correspondingly. Instead, spreads rebounded inversely during recent trading sessions as prices fell, suggesting that Russian sanctions continue to materially disrupt European supply. This impact persists despite shifting market expectations.

For cross-regional spreads, the 7-day moving average of SC-Brent spreads showed oscillating patterns. Middle East freight rates surged sharply on Thursday, primarily due to heightened caution among Asian buyers regarding Russian oil purchases following proposed secondary sanctions. This prompted a shift toward Middle East imports. Additionally, China's early issuance of 2026 crude import quotas (including 750k tons for Rongsheng, 3 million tons for Hengli, and 5 million tons for Shenghong, usable by end-2025) eased quota tightness, boosting shipping demand at favorable oil prices and driving freight rates higher. This rapid freight increase, fueled by supply-demand tension and market sentiment, provided cost support for SC's domestic landed prices, slightly widening its spread against international benchmarks. However, the widening remained modest amid broader oil price declines. For SC-Brent spread longs, a wait-and-see approach remains advisable.

Short-term outlook: Persistent geopolitical uncertainties have made investors wary of volatile price swings, discouraging firm short positions. While some bearish traders may be disappointed by renewed price declines, this reflects current market realities. Even at current weakened price levels, significant fluctuations remain probable. Comprehensive assessment suggests natural downward pressure on oil prices before Q1 2026 amid oversupply fundamentals, but geopolitical factors will continue injecting uncertainty. Given risk-reward ratios, excessive short chasing is not recommended—option strategies may offer better stability. The primary trading approach remains patiently capitalizing on selling opportunities during price rebounds, with careful attention to timing.