Hot Sections

Watchlist Data Center Market Center Fund Flows Simulated Trading

Client

Market Outlook Crude oil prices continued their sharp ascent on Tuesday. Despite remarks from US President Trump stating, "I'd like to see oil prices at $53 per barrel. We will push prices lower," which caused a brief dip, the market ultimately closed significantly higher. WTI crude broke through $60, followed by Brent surpassing $65, as market focus remained squarely on developments in Iran. The US government's call for its citizens to leave Iran, coupled with France withdrawing non-essential embassy staff and Trump's cancellation of all planned meetings with Iranian officials, fueled concerns about escalating military action risks from the US and Israel. Earlier, Trump threatened 25% tariffs on countries doing business with Iran via social media. The sustained pressure on Iran continues to stimulate market sentiment. After four consecutive days of gains, Brent crude has surged over $5, hitting its highest level since November. Geopolitical risk premiums are more pronounced in the global benchmark (Brent), which is more directly linked to political risks. In contrast, physical market premiums in the Middle East appear weak. The Brent-Dubai spread widened to its highest level since last July, clearly indicating that geopolitical factors are injecting a risk premium into oil prices. The Brent crude forward curve also showed a noticeable rebound recently. The EIA released its first Short-Term Energy Outlook of the new year. While it did not revise its supply surplus expectations downwards due to recent geopolitical tensions, it slightly raised its oil price forecasts. It now expects WTI to average $52.21 per barrel in 2026, up from a previous estimate of $51.42, and $50.36 per barrel in 2027. The EIA maintains that prices will decline because global petroleum production continues to outpace consumption, leading to rising inventories. Global stocks are projected to increase through 2027, albeit at a slowing pace. Following a record annual high of 13.6 million barrels per day in 2025, US crude output is forecast to decline in the subsequent years due to slowing drilling activity outpacing gains in drilling productivity, with a drop of less than 1% in 2026 and 2% in 2027. The API data released early Wednesday showed a significant crude inventory build of 5.278 million barrels for the week ending January 9th, far exceeding the expected draw of 238,000 barrels. Furthermore, gasoline and distillate inventories also saw massive builds exceeding ten million barrels. This is a distinctly bearish weekly report. However, despite this clear oversupply signal from the data, oil prices maintained their strong momentum, with geopolitical risks keeping market sentiment elevated. While these risks are supporting prices in the near term, they are also accumulating downward pressure, akin to a landslide lake. Prices have now rebounded to a critical technical resistance level, showing clear signs of being overbought and needing correction. In the short term, the extent of the price surge will ultimately depend on the direction of the Iran situation, requiring a clear resolution. The market remains characterized by significant uncertainty and high volatility. Chasing the rally at current levels is not advisable; instead, preparations for selling on strength should be made. The primary focus at this stage should be rigorous risk management, followed by opportunity identification, with careful attention to market rhythm. Daily Moves 【1】WTI crude futures gained $1.65, or 2.77%, settling at $61.15 per barrel. Brent crude futures rose $1.60, or 2.51%, settling at $65.47 per barrel. INE crude futures increased by 2.9%, closing at 450.4 yuan. 【2】The US Dollar Index advanced 0.29% to 99.18. The HKEX USD/CNY rate rose 0.08% to 6.9508. The US 10-year Treasury yield was unchanged at 112.2. The Dow Jones Industrial Average fell 0.8% to 49,191.99. Recent Developments 【1】The US Energy Information Administration (EIA) released its Short-Term Energy Outlook, noting that after reaching an annual record of 13.6 million barrels per day in 2025, US crude oil production is forecast to decline in the subsequent years, falling by less than 1% in 2026 and 2% in 2027. With persistently lower oil prices, production is expected to decrease as the slowdown in drilling activity outpaces improvements in drilling productivity. In its forecast, the EIA sees WTI crude averaging $52 per barrel in 2026 and $50 per barrel in 2027, down from $65 in 2025. The agency expects prices to fall in 2026 due to global petroleum production exceeding consumption, leading to inventory builds. Global inventories are projected to continue increasing through 2027, albeit at a slower pace. The EIA forecasts Brent crude to average $56 per barrel in 2026, a 19% decrease from 2025, and $54 per barrel in 2027. Global liquid fuels production is expected to grow by 1.4 million barrels per day in 2026 and 0.5 million barrels per day in 2027. Growth in 2026 is driven by OPEC+ crude production increases, while growth in 2027 is led by non-OPEC+ countries, primarily in South America. The forecast assumes existing sanctions on Venezuela will remain in place through the end of 2027. 【2】【Geopolitical Tensions Intensify, Diverging Global and Middle Eastern Oil Benchmarks】 ⑴ The Middle Eastern benchmark Dubai crude weakened for a second consecutive session on Tuesday, while prices for Oman and Murban crude strengthened, indicating widening differentials among regional grades. ⑵ The premium of global benchmark Brent over Dubai crude rose to its highest level since last July, reaching $1.97 per barrel for the March contract during early Tuesday trading, primarily supported by geopolitical tensions involving Iran and Venezuela. ⑶ In the physical market, the cash Dubai spread to swaps fell by 5 cents to a discount of -42 cents per barrel, suggesting relatively ample immediate supply or weak demand. ⑷ Specific trades showed a high volume of spot transactions among major traders concentrated in the range of $61.70 to $61.84 per barrel, involving giants like BP, Glencore, Trafigura, and Vitol, reflecting active market participation. ⑸ According to institutional data, Iran's crude held in floating storage has hit a record high, equivalent to about 50 days of production, mainly due to reduced purchases from China because of sanctions and Tehran's efforts to protect its supplies from potential military strikes. ⑹ Global commodity trading giants Vitol and Trafigura have begun discussions with Asian refiners to sell Venezuelan crude for March delivery, indicating they are moving to secure trade opportunities in the country with the world's largest oil reserves ahead of US energy majors. ⑺ From a market perspective, geopolitical risk premiums are more heavily priced into the global benchmark (Brent), which is more directly linked to political risks, while Middle Eastern benchmarks are constrained by regional supply, demand, and logistical fundamentals. The widening spread reflects the complex layers of market pricing. ⑻ Future attention should focus on the drawdown rate of Iran's floating storage, the actual export flow of Venezuelan crude, and procurement dynamics from major consuming refiners, as these will be key factors influencing the Brent-Dubai spread and the relative strength of regional benchmarks. 【3】Sources reported that two more tankers (the Floyd and the Delta Topaz) were attacked by drones near the Caspian Pipeline Consortium (CPC) terminal on Tuesday, bringing the total number of attacked vessels to four. Kazakhstan's Energy Ministry stated that oil loadings at the CPC's Black Sea terminal are proceeding via the SPM-1 single point mooring facility of the Caspian Pipeline. According to sources, Kazakhstan's oil and gas condensate production from January 1-12 fell by 35% compared to the December average, to 1.21 million barrels per day.

Massive Information, Precise Analysis, All in the Sina Finance App

Editor in Charge: Zhao Siyuan