Oil Experiences Small Decline Followed by Rise, Marking the Most Uneventful National Day Holiday in Five Years

 1. Overnight Crude Oil Market Dynamics

On October 8th, the market remained concerned about the supply risks brought about by the instability of the Russia-Ukraine situation, compounded by the continuation of U.S. sanctions on certain oil-producing countries, leading to a rise in international oil prices. NYMEX crude oil futures for the November contract rose by $0.82 per barrel to $62.55, a month-on-month increase of 1.33%. ICE Brent crude futures for the December contract rose by $0.80 per barrel to $66.25, a month-on-month increase of 1.22%. China's INE crude oil futures were closed due to the National Day and Mid-Autumn Festival holidays.

Future Market Outlook

Currently, the market still needs to observe the actual occurrence of oversupply in the crude oil market in the fourth quarter, and the complex geopolitical landscape continues to face many uncertainties. Serbian President Aleksandar Vučić recently stated that everyone is currently preparing for war, expressing concern that a new war may break out. In the fourth quarter, precautions still need to be taken against the sudden escalation of geopolitical factors in the short term. Additionally, on the macro level, the market is trading on last Wednesday's initiation of a U.S. government shutdown, which is driving funds into safe-haven assets, a phenomenon referred to by market participants as "devaluation trading." When the market anticipates that a currency (especially the U.S. dollar) is likely to weaken, investors, to hedge against the risk of purchasing power erosion, proactively withdraw funds from dollar assets and invest in assets considered to have better value preservation potential, such as gold, stocks, and cryptocurrencies. As a result, many risk assets have recently surged significantly, which has influenced market sentiment to some extent and indirectly affected investors' expectations for oil prices.

Overall, the current stage of crude oil is influenced by a complex set of factors. Geopolitical and macroeconomic aspects have a significant bullish impact on oil prices, while the increased production by OPEC+ brings about oversupply pressure, which is the main bearish factor. This factor is the core driver determining the current direction of oil prices. It is expected that the price will gradually trend lower in a volatile manner until the market changes its expectations regarding the oversupply pressure. Based on a comprehensive assessment of various influencing factors, the focus for key opportunities is still on capturing short-selling opportunities after price rebounds, while being mindful of timing and participating with caution.

II. Macroeconomic Market Dynamics

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3. Plastic Market Dynamics

Oil prices first fell and then rose, with crude oil experiencing the calmest National Day holiday in five years. During the holiday, plastic futures were closed, and the market was all in the red before the holiday.

The plastic 2601 contract is quoted at 7,153 yuan/ton, down 0.29% from the previous trading day.

The PP2601 contract reported 6,852 yuan/ton, down 0.68% from the previous trading day.

The PVC2601 contract is quoted at 4839 yuan/ton, a decrease of 1.149% compared to the previous trading day.

The styrene 2511 contract was reported at 6,835 yuan/ton, down 1.50% from the previous trading day.

4. Today's Market Forecast

PE: Recently, offers have been relatively concentrated, but the U.S. dollar market is maintaining a downward trend with poor profit margins. The market sentiment is rather pessimistic, and transactions are mostly focused on low-priced sources. It is expected to maintain a slight downward fluctuation trend in the short term.

PP: Post-holiday demand recovery is slow, and supply pressure remains. The situation of a "not-so-busy peak season" restricts the upward space for prices. It is expected that after the holiday, the polypropylene market will weakly fluctuate around 6,700-6,800 yuan/ton. Focus should be on inventory levels and downstream demand.

PVC: The pressure of resuming work after the holiday has eased, and foreign trade has benefited to some extent from the potential anti-dumping measures in India not being implemented, which supports the new ethylene-based market to some degree. After the holiday, with the commencement of maintenance and the expected support from industry policies, the PVC market is expected to undergo slight weak fluctuations and adjustments. The carbide-based PVC type 5 is expected to be in the range of 4,600-4,750 RMB/ton for cash and carry at the warehouse.