Report Industry Investment Rating No relevant content provided. Core View of the Report In the context of the reshaping of the global supply - demand structure, with the "large supply increase" on the supply side and the "slow recovery" on the demand side, and the weakening marginal impact of geopolitical risks, the market has returned to fundamental dominance. Without major unexpected events, it is expected that the prices of domestic and foreign crude oil futures may continue the pattern of being easy to fall and hard to rise. Attention should be paid to the dynamic evolution of inventory, policies, and geopolitical variables [2][5]. Summary by Related Catalog Market Performance - Last week, domestic and foreign crude oil futures prices showed a unilaterally weak downward trend. The price of the main contract of domestic crude oil futures dropped to a minimum of 433 yuan/barrel, with a cumulative decline of 6.23% for the week, and the futures price was in a pattern of being easy to fall and hard to rise [2]. Supply - side Situation - Since April 2025, OPEC+ has gradually abandoned the production - cut strategy and shifted to a competitive strategy of "increasing production to maintain market share". In early November, it decided to increase production by 137,000 barrels per day, the same as in October. After canceling the voluntary production cut of 2.2 million barrels per day at the end of September, OPEC+ is steadily advancing the second - stage production increase plan, and the daily average new supply in the fourth quarter is expected to exceed 430,000 barrels [2]. - The actual production of OPEC has fulfilled the strong expectation of production increase. Major oil - producing countries such as Saudi Arabia and Iraq maintain high - level exports, with Saudi Arabia's crude oil exports stable at 9 million barrels per day and Iraq's at 4 million barrels per day, resulting in abundant supply in the Middle East [3]. - Non - OPEC+ countries' capacity expansion has further exacerbated the supply glut. The production of South American oil - producing countries such as Brazil and Guyana has been rising, and US shale oil has shown amazing resilience. As of the week of October 10, 2025, the daily average production of US crude oil was 13.636 million barrels, a slight weekly increase of 700 barrels per day and a significant year - on - year increase of 136,000 barrels per day, approaching the historical peak [3]. Demand - side Situation - After the end of the peak travel season in the Northern Hemisphere, global refineries have entered the seasonal maintenance period, and the demand for industrial and transportation oil has significantly declined. As of the week of October 10, 2025, the operating rate of US refineries dropped to 85.7%, a significant weekly decline of 6.7 percentage points, a significant month - on - month decrease of 7.6 percentage points, and a slight year - on - year decline of 2.0 percentage points. In the Asian market, as of the week of October 17, 2025, the operating rate of China's major refineries dropped to 73.48%, and Shandong's local refineries remained at a low level of 54.95% [4]. - Due to the seasonal weakening of demand, the commercial crude oil inventory in the US has ended the destocking phase and entered the accumulation stage. As of the week of October 10, 2025, the US commercial crude oil inventory (excluding strategic petroleum reserves) reached 424 million barrels, a significant weekly increase of 3.524 million barrels and a slight year - on - year increase of 3.235 million barrels [4]. Pricing Logic Change - The pricing logic of domestic crude oil futures has changed significantly, shifting from the "cost + premium" model relying on geopolitical risk premium and OPEC+ production cuts to the fundamental pricing driven by "supply - demand + inventory". The linkage between domestic crude oil futures prices and WTI and Brent has further strengthened [5]. - The narrowing profit margin of domestic refineries and low processing enthusiasm have led to a decrease in the willingness to accept high - cost crude oil, further suppressing the rebound momentum of domestic prices [5].

Core Viewpoint - The global crude oil supply-demand structure is undergoing significant adjustments, with increasing supply and weak demand creating a contrasting scenario that is leading to a downward trend in oil prices [1][2][3][4] Supply Side Analysis - OPEC+ is shifting from a production cut strategy to a competitive "increase production to maintain market share" approach, with plans to increase output by 137,000 barrels per day in November, maintaining the same increase as in October [1][2] - Major oil-producing countries like Saudi Arabia and Iraq are maintaining high export levels, with Saudi exports stable at 9 million barrels per day and Iraq at 4 million barrels per day, contributing to an overall surplus in the Middle East [2] - Non-OPEC+ countries, particularly in South America, are expanding production, with U.S. crude oil production reaching an average of 13.636 million barrels per day, a year-on-year increase of 136,000 barrels per day, nearing historical highs [2] Demand Side Analysis - Demand for oil is weakening, particularly as the summer travel season ends, leading to a seasonal decline in refinery operations. U.S. refinery utilization dropped to 85.7%, a significant decrease of 6.7 percentage points week-on-week [3] - In Asia, China's main refineries are operating at a low rate of 73.48%, with Shandong's independent refineries at 54.95%, further suppressing crude oil processing demand and increasing refined oil inventory pressure [3] Pricing Dynamics - The pricing logic for domestic crude oil futures is shifting from a "cost + premium" model, reliant on geopolitical risk and OPEC+ cuts, to a "supply-demand + inventory" driven model, reflecting a stronger correlation with WTI and Brent prices [4] - Domestic refinery profit margins are narrowing, leading to reduced willingness to accept high-cost crude, which further suppresses the potential for price rebounds [4] - The recent weak performance of domestic crude oil futures is a natural outcome of the global supply-demand restructuring, with supply outpacing demand recovery and diminishing geopolitical risk impacts [4]