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**I. Market Updates**

The Federal Reserve cut rates by 25 basis points at its September meeting but maintained a hawkish tone in its statement. Geopolitical risks have emerged across multiple fronts without causing substantial supply disruptions. Israel's airstrikes on Lebanon, ongoing Russia-Ukraine conflict, Russian drones entering Polish airspace, and US military deployment near Venezuela have only created emotional market volatility. OPEC+ maintains its current production increase plan, though internal divisions are emerging. The EU added 118 shadow tankers to its Russian oil sanctions list and lowered the price cap to $47.6, but market reaction remained muted.

**II. Product Analysis**

**2.1 Market Performance** Brent crude is currently trading at $66.79 per barrel, down approximately 0.48% for the week, with trading volume declining 12% from the previous week and open interest falling 3%, indicating low market participation. The futures structure remains in contango with near-month contracts trading at approximately $0.64 discount. The forward curve has flattened. Crack spreads have narrowed to seasonal lows, confirming weak demand conditions. WTI fell to near $63 during the session, repeatedly testing support at the 100-hour moving average. A break below this level could target $62.30.

**2.2 Supply** OPEC+ October production increase has been reduced to 137,000 barrels per day, but total production remains at elevated levels. With the Middle East summer season ending, power generation oil demand is declining, injecting additional supply into the market. Non-OPEC producers like the US have maintained stable production levels, while Brazil and Guyana are expected to increase combined output by 900,000 barrels per day over the next five years. Geopolitical disruptions, such as Ukrainian attacks on Russian refineries affecting approximately 100,000 barrels per day of capacity, have not reversed the production increase trend.

**2.3 Demand** US refinery utilization rate remains high at 93.3%, with gasoline demand down 0.5% year-over-year. Overall, Northern Hemisphere demand peak continues. Chinese refining margins have compressed, leading to reduced processing volumes. From a global perspective, demand is about to enter the weakest phase of the year, with transportation fuel demand accelerating its decline.

**2.4 Inventory and Structure** Recent EIA crude inventory data confirms that US domestic demand has not yet shifted direction, with the EIA weekly report showing a 9.285 million barrel drawdown in US inventories. The contango structure has deepened, with near-month discounts expanding to over $0.7, reflecting expectations of spot market surplus. Position structures show short interest concentrated in distant months, suggesting medium to long-term bearish sentiment.

**III. Investment Recommendations**

Fundamentals are dominated by increasing supply and decreasing demand, with surplus pressure intensifying. Geopolitical risks provide only short-term support without escalation, making it difficult to reverse the weak trend. The market is fluctuating with a declining center, converging toward key support levels, with heightened risk of a downward break.

**Trading Strategy**: Unilateral approach: Short Brent crude on rallies.

**Risk Warnings**: Escalation of geopolitical events leading to oil-producing nation supply disruptions (such as large-scale shutdowns of Russian or Venezuelan export facilities due to attacks); unexpected OPEC+ shift toward production cuts; sudden macro sentiment changes (such as Fed policy turning dovish to stimulate risk assets).

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**Disclaimer**: The futures market carries risks; enter with caution. All content in this article is sourced from publicly available information, and opinions are for reference only.