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Oversupply and geopolitical tensions intertwined, and the international crude oil market is facing repricing
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market Analysis]: Oversupply and geopolitical xmh100.competition are intertwined, and the international crude oil market is facing repricing." Hope this helps you! The original content is as follows:
On Tuesday (November 25) during the Asia-Europe session, the crude oil market continued to adjust downward and fell by 0.31%, trading at 58.66, failing to continue yesterday's rebound. The crude oil market has encountered significant downward pressure so far this year, and Brent crude oil has fallen by 14% this year.
Recently, oil prices have experienced a resistive decline. On the one hand, the resistance factor xmh100.comes from the strength of the stock market. On the other hand, the pressure on oil prices stems from the expectation of the restart of peace negotiations between Russia and Ukraine and the unaffected supply.
Russian-Ukrainian peace talks affect oil price and supply expectations
The United States and Ukraine held talks in Geneva on Sunday. Both sides called the talks "productive" and agreed to continue intensive consultations on the "improved version" of the peace plan proposed by the United States.
The market generally believes that if peace is achieved in Ukraine, some restrictions and restrictions on Russia may be relaxed, which will further exert downward pressure on energy prices. However, in the short term, marginal changes in geo-risk premiums are triggering traders to repricing.
However, Ukrainian officials disclosed that the new peace plan contains 19 clauses and does not set hard constraints on the scale of Ukraine’s military strength. Judging from the probability of the agreement being implemented, Russia’s acceptance of the above clauses is doubtful, and geopolitical negotiations are still at a deadlock.
The rise in oil prices in the market yesterday may have xmh100.compromised the original 28 contracts proposed by the United States, and the prospect of their signing is slim.
U.S. President Donald Trump also posted on his social platform that "there may be positive developments happening." The market is focusing on these developments, with traders waiting for further clarity while following the strength in risk assets.
Chief Executive, Global Risk Management xmh100.companyAnalyst Arne Roman Rasmussen pointed out that the oil market is likely to remain tense before Thanksgiving on Thursday, and the probability of reaching a peace agreement or ceasefire agreement during the weekend increases, which may support further decline in oil prices.
Denis Kiesler, senior vice president of financial trading at BOK, predicts that the market will remain volatile before the holidays, and short covering may occur.
It is worth noting that U.S. crude oil futures are expected to record a fourth consecutive month of decline, which will be the longest downward cycle since 2023.
Adjustment of trade pattern: Restrictions on Russia have not seriously affected crude oil supply
Another important variable on the supply side is the restructuring of global crude oil trade flows after the upgrade of restrictions on Russia.
After the United States initiated restrictions on Russia’s leading energy producers Rosneft PJSC and Lukoil PJSC, this restriction is a further upgrade on the previous restrictions on Gazprom Neft PJSC and Surgutneftegas PJSC. Affected by this, Indian refineries have significantly increased crude oil purchases from the Middle East and other regions.
However, the actual impact on crude oil supply is contrary to market expectations. Due to the low-price strategy of Russia's core crude oil variety "Urals", it has triggered a loosening attitude among Indian refineries.
According to people familiar with the matter, the current price quoted by Indian refineries for purchasing Ural crude oil is at a discount of up to US$7 per barrel xmh100.compared to the spot price of North Sea Brent crude oil (DatedBrent) based on the landed price, which is the lowest level in at least two years. This batch of quotations corresponds to crude oil cargo ships loaded in December and arriving in January 2025.
Before and after the restrictions, the supply of crude oil was not significantly restricted. It was just that India bought it cheaper and Russia earned less.
It is worth noting that only about one-fifth of all crude oil tankers currently quoted are from entities that are not included in the restricted blacklist, which means that despite the outstanding price attractiveness, regulatory xmh100.compliance risks still limit the recovery space of Russia-India crude oil trade.
Breaking news from the agency: Oversupply dominates the long-term downward trend
JPMorgan Chase’s latest forecast shows that due to the impact of severe oversupply in the global crude oil market, the price of Brent crude oil, the international crude oil benchmark, may drop to the range of US$30 per barrel by 2027. The core support for this pessimistic expectation is the market's concerns about the continued expansion of the supply side - the International Energy Agency has warned that there will be a record crude oil supply glut in 2026.
Goldman Sachs gave a more specific short- to medium-term outlook: the average daily supply surplus of U.S. benchmark West Texas Intermediate crude oil (WTI) will reach 2 million barrels in 2026, and the average price for the whole year may be only US$53 per barrel. Dan Streven, co-head of global xmh100.commodities research at the bank, made his position clear, oil prices will continue to decline next year, and investors are advised to decisively place short crude oil orders.
However, Goldman Sachs also pointed out that 2026 will be the final year for the current large-scale supply wave to impact the market, and the oil market is expected to xmh100.complete rebalancing in 2027.
Although institutions are collectively bearish, there is still a consensus of staged support in the market: analysts and investment banks generally believe that even if oil prices decline in the short term due to strong supply from OPEC+ and non-OPEC oil-producing countries in the Americas, it will be difficult to fall below the $40 per barrel mark.
Outlook from a Trading Perspective: Focus on Core Variables and Key Prices
For crude oil traders, the core contradiction in the current market is the game between "long-term oversupply" and "short-term geopolitical disturbances". Three major variables need to be focused on: First, the substantive progress of the Russia-Ukraine peace negotiations. If a ceasefire agreement is reached, restrictions may be relaxed. Bringing additional supply and further suppressing oil prices;
The second is OPEC+'s trend of cutting production. If oversupply continues to intensify, whether oil-producing countries will initiate a new round of production cuts will become a key support;
The third is the enforcement and exemption space of restrictions on Russia, which directly affects the export scale of Ural crude oil and the structure of global trade flows.
From a technical perspective, although the moving averages of oil prices are all short, oil prices still hold the key price levels of 58.60 and 57.25. Bulls still have the technical support to counterattack at any time. The market is waiting for Russia and Ukraine to sign an agreement, and a new round of armistice agreement is expected to be signed on November 27.
The above content is all about "[XM Foreign Exchange Market Analysis]: Oversupply is intertwined with geopolitical tensions, and the international crude oil market is facing repricing." It was carefully xmh100.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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