Report Summary 1. Investment Rating No investment rating for the industry is provided in the report. 2. Core View The report suggests that the domestic crude oil futures contract 2510 will likely run weakly with a volatile and weak trend in the short - term and a volatile trend in the medium - term. The main reason is the bearish factors in the market, especially the expected record - high supply glut in the global crude oil market next year [1][5]. 3. Summary by Related Content Price and Trend - The domestic crude oil futures 2510 contract closed slightly lower by 0.92% to 485.7 yuan/barrel on Wednesday night. It is expected to maintain a volatile and weak trend on Thursday [5]. - The short - term view for crude oil 2510 is volatile, the medium - term view is volatile, and the intraday view is volatile and weak, with an overall reference view of running weakly [1]. Market Logic - The International Energy Agency (IEA) released an energy outlook report. Due to slow demand growth and a surge in supply, especially with OPEC+ increasing production, the global crude oil market is expected to face a record - high supply glut next year. Although the IEA raised the global crude oil demand data for this year and next, the demand growth rate has declined, less than half of that in 2023. As a result, crude oil inventories will accumulate at a rate of 2.96 million barrels per day, exceeding the average accumulation rate during the 2020 pandemic [5].

Group 1: Global Economic Overview - The global economy is experiencing low growth, with expectations of further slowdown due to U.S. tariff policies and geopolitical tensions [12][13] - The International Monetary Fund (IMF) has slightly raised its 2025 global growth forecast to 3%, while the OECD has lowered its forecast from 3.1% to 2.9% [12][13] - The U.S. Federal Reserve has maintained interest rates, with expectations of fewer rate cuts than previously anticipated [13] Group 2: Oil Supply Dynamics - OPEC+ is increasing production, with daily output rising from 138,000 barrels in April to 548,000 barrels in August-September [15] - Global oil production is expected to reach a historical high of 181 million barrels per day by 2025, despite a projected 4% decrease in upstream oil and gas investment [14][15] - Geopolitical factors, including sanctions on Russia and Iran, are creating uncertainties in global oil supply [14][17] Group 3: Oil Demand Outlook - Global oil demand growth forecasts have been revised down by various institutions, with EIA predicting an increase of only 800,000 barrels per day for the year, down from an initial estimate of 1.33 million barrels per day [19][21] - U.S. oil consumption growth is expected to be limited to 100,000 barrels per day due to economic slowdown and tariff impacts [19] - Domestic oil consumption in China has also shown weakness, with crude oil imports growing only 1.57% in the first half of the year [20] Group 4: Market Surplus Expectations - The EIA has raised its forecast for oil market surplus, expecting a surplus of 740,000 barrels per day in Q3 and 1.06 million barrels per day in Q4 [21] - IEA has similarly adjusted its surplus expectations, predicting a total surplus of 1.4 million barrels per day for the year [21] - The combination of increasing supply and weakening demand is leading to expectations of a continued oversupply in the oil market [22]

Group 1 - Diamondback Energy Inc. signals a cautious outlook for the global oil market, anticipating a potential oversupply in the coming months due to changes in supply and demand dynamics [1] - The company plans to cut capital expenditures by $100 million and adjust production forecasts while delaying some hydraulic fracturing operations as a defensive strategy [1][2] - CEO Keith Hutton emphasizes the need to avoid passive production increases in a market characterized by oversupply and price pressure [1] Group 2 - OPEC+ has recently approved an increase in oil production by 547,000 barrels per day, reversing significant cuts planned for 2023, which has directly impacted market conditions [1] - Since mid-January, U.S. crude oil prices have dropped by 17%, correlating with OPEC+’s decision to expand production capacity [1] - The International Energy Agency (IEA) forecasts a significant oversupply of 2 million barrels per day in the global market for the fourth quarter, driven by increased supply from the Americas [1] Group 3 - Diamondback's operational strategy for the remainder of 2025 will focus on expenditure control and stabilizing production, reflecting a cautious approach to market trends [2] - The company’s previous assessment that U.S. shale oil production has peaked aligns with a 12% decline in domestic drilling activity, marking a four-year low [2] - The strategic adjustments by Diamondback illustrate the industry's adaptive strategies in response to price volatility and supply-demand imbalances [2]

Core Viewpoint - OPEC+ has agreed in principle to significantly increase oil production in September, with plans to formally approve an increase of 548,000 barrels per day during a video meeting on August 3 [1][3]. Group 1: Production Increase - OPEC+ plans to reverse the previous reduction of 2.2 million barrels per day implemented by eight member countries, including the UAE, which is gradually implementing additional production quotas [3]. - The increase in production marks a significant policy shift from price maintenance to volume expansion, aimed at capturing global market share amidst geopolitical tensions and summer demand [3]. - RBC Capital Markets anticipates that oil-producing countries will pause further increases to assess market conditions and macroeconomic trends as the voluntary reduction approaches its end [3]. Group 2: Market Impact - The decision to increase production comes at a time when U.S. employment data fell short of expectations, raising concerns about global energy demand [1][5]. - Analysts warn that the increase in supply, combined with slowing global economic growth, could lead to an oversupply situation in the oil market by the end of the year [1][3]. - UBS analysts suggest that the potential quota increases are largely already reflected in current prices, with Brent crude expected to remain around $70 per barrel [3]. Group 3: Geopolitical Context - The timing of OPEC+'s decision is sensitive, as U.S. President Trump has threatened secondary sanctions on Russian oil exports to pressure Russia regarding its actions in Ukraine [5]. - Trump's potential sanctions could conflict with his goal of lowering oil prices, as any disruption in Russian oil exports may lead to higher international oil prices [5][6]. - Analysts emphasize the need for OPEC+ to balance market share recovery with the risk of falling oil prices, which could impact their revenues significantly [7].