Core Viewpoint - The article discusses the correlation between U.S. oil prices, U.S. Treasury yields, and the political responses from the Trump administration, highlighting a pattern of intervention when oil prices approach critical thresholds [1][2]. Group 1: Oil Prices and Political Responses - Observations indicate that since the outbreak of war, Trump's rhetoric tends to escalate during weekends when oil markets are closed, and peace signals emerge when oil prices rise [2]. - A clear pattern has emerged: when U.S. crude oil prices approach $95 to $100 per barrel, the White House intensifies its cooling rhetoric, leading to expectations of government intervention in the oil market [2]. - The rise in gasoline prices above $4 per gallon is politically sensitive, as it directly impacts voters, making it a critical concern for the administration [2]. Group 2: Market Reactions and Investor Sentiment - Investors are currently focused on predicting the next "TACO moment," a term referring to potential policy reversals by Trump, particularly in the context of the ongoing conflict [3][4]. - Deutsche Bank has developed a "pressure index" to gauge the likelihood of strategic adjustments from the U.S. government, based on factors such as Trump's approval ratings and inflation expectations [5]. - The pressure index is nearing its highest level since Trump returned to the White House, indicating a strong motivation for potential adjustments if multiple economic pain points worsen [6]. Group 3: Treasury Yields as a Trigger Point - U.S. Treasury yields are another critical trigger point for the Trump administration, with heightened sensitivity observed as the 10-year Treasury yield approaches 4.5% [8]. - The current yield has reached a near 12-month high, driven by inflation expectations linked to rising oil prices, serving as an important indicator for monitoring White House policy shifts [8]. Group 4: Investor Strategies Amid Uncertainty - Many investors are adopting a wait-and-see approach due to the unpredictable nature of the situation, with concerns that any premature positions could be adversely affected by Trump's social media posts [9].

Market Overview - The Japanese Nikkei 225 index opened lower, breaking below 53,000 points, and was reported at 52,374.46 points, down 5.84% [1][2] - The Korean Composite Index (KOSPI) fell over 7%, with major companies like Samsung Electronics and SK Hynix dropping more than 7% [1] - The KOSPI 200 futures triggered an emergency mechanism due to a 5% drop, leading to a 5-minute trading suspension [1] Bond and Commodity Markets - The yield on Japan's 10-year government bonds rose by 4.5 basis points to 2.205% [3] - International oil prices surged, with WTI crude oil exceeding $100 per barrel for the first time since the outbreak of the Russia-Ukraine conflict, rising over 18% to $107.85 per barrel [3] - The average price of regular gasoline in the U.S. increased to $3.45 per gallon, a 16% rise since the onset of the Iran conflict [3] Geopolitical Impact - Gold prices experienced a sharp decline of over $100, falling below $5,070 [4] - The geopolitical tensions have impacted global shipping, with the U.S. government proposing a $200 billion maritime reinsurance plan [4]

Group 1 - International oil prices have surpassed $100 per barrel for the first time since the outbreak of the Russia-Ukraine conflict in 2022, with U.S. crude futures rising by 14.7% and Brent crude futures increasing by 12.63% to $104 per barrel [2] - Following the escalation of the Iran conflict on February 28, the average price of regular gasoline in the U.S. has risen to $3.45 per gallon, reflecting a 16% increase compared to the previous week [2] - The Dow Jones index futures fell by approximately 851 points, a decline of about 2%, while S&P 500 and Nasdaq index futures dropped by 1.73% and 1.65% respectively [2]

Market Overview - The U.S. stock market continues to experience volatility, with ongoing declines despite better-than-expected employment data for November [2][3] - The November non-farm payrolls increased by 64,000, contrasting with a decrease of 105,000 in October, while the unemployment rate rose to 4.6%, the highest since 2021 [3] Employment Data Insights - The employment report's weakness suggests that previous rate cuts by the Federal Reserve were justified, but it does not support the need for significantly deeper cuts in the future [3] - Analysts indicate that the conflicting signals from the labor market will intensify discussions within the Federal Reserve regarding future monetary policy [3] Technology Sector Performance - The technology sector has seen widespread declines, with notable drops in stock prices for major companies such as ARM, Micron Technology, and Qualcomm [4][5] Oil Market Dynamics - The oil market experienced a significant drop, with WTI crude oil futures falling below $55 per barrel for the first time since February 2021, with intraday losses exceeding 3% [6] - Year-to-date, WTI crude oil futures have declined approximately 22%, marking the worst annual performance since 2018, while Brent crude has dropped nearly 20%, the worst since 2020 [9] Gasoline Prices - According to the American Automobile Association (AAA), U.S. gasoline prices have fallen below $3 per gallon, reaching a four-year low [10] - The decline in oil prices is attributed to OPEC+ members increasing production after years of cuts, alongside investor sentiment regarding reduced geopolitical risks [10]

Market Overview - The US stock market continues to experience volatility, with a downward trend observed on December 16, despite better-than-expected employment data for November [1][2] - The November non-farm payrolls increased by 64,000, contrasting with a decrease of 105,000 in October, while the unemployment rate rose to 4.6%, the highest since 2021 [2] - Technology stocks generally declined during this period [2] Oil Market Dynamics - WTI crude oil futures fell below $55 per barrel for the first time since February 2021, with intraday losses exceeding 3% [4] - The oil market is facing its worst performance in nearly seven years, with WTI crude down approximately 22% year-to-date, marking the worst annual performance since 2018 [6] - Brent crude has also seen a decline of nearly 20%, the worst since 2020 [6] - Key factors contributing to the pressure on oil prices include OPEC+ members increasing production after years of cuts and the potential for reduced geopolitical risks, particularly regarding a peace agreement between Ukraine and Russia [7]

Economic Indicators - The US Redbook commercial retail sales year-on-year growth rebounded slightly to 5.9%, with a four-week moving average of 5.45%[5] - The WEI index for the US fell to 2, down from 2.27 the previous week, indicating a decrease in economic activity[4] - The German WAI index rose to approximately 0.18, up from 0.08 the previous week, suggesting improved economic conditions[4] Financial Conditions - The Bloomberg Financial Conditions Index for the US decreased to 0.511 from 0.514 a week earlier, indicating tighter financial conditions[7] - The offshore dollar liquidity is tightening, with the three-month swap basis for the yen against the dollar at -25.8bp, worsening from -24.3bp a week prior[8] - The credit spreads for US investment-grade and high-yield corporate bonds widened, with high-yield spreads at 2.91bp, compared to 2.96bp a week earlier[9] Price Trends - The RJ/CRB commodity price index stood at 302.35, reflecting a 0.5% increase from the previous week[6] - US gasoline prices rebounded to $2.93 per gallon, up 1% from the previous week[6] Interest Rate Spreads - The 10-year US-Japan government bond spread narrowed to 240.5bp from 241.6bp the previous week[10] - The 10-year Italian-German bond spread decreased to 75.5bp from 76bp a week earlier, indicating reduced risk perception in the Eurozone[10]

Core Insights - The ceasefire between Israel and Iran has reduced supply risks in the Middle East, leading to a decline in oil prices [1] - U.S. gasoline prices have followed the trend of oil futures, experiencing a drop of 5% within the day, marking a two-week low [1] Industry Impact - The reduction in geopolitical tensions in the Middle East is likely to stabilize oil supply chains, which could positively influence global oil markets [1] - The decrease in gasoline prices may provide relief to consumers and impact overall demand dynamics in the energy sector [1]

Report Summary 1. Investment Rating No investment rating for the industry is provided in the report. 2. Core View - This week, oil prices showed a strong performance, with the fundamentals tightening on a sequential basis, concerns over geopolitical risks escalating, greater fluctuations in crude oil spreads, and rising absolute prices. WTI outperformed Brent and Dubai. Fundamentally, global oil inventories increased, while the drawdown of US commercial inventories exceeded expectations, and the number of US oil rigs dropped significantly. On the negative side, leading data from the US job market indicated a cooling trend, the latest apparent demand for US gasoline and diesel declined sharply. Attention should be paid to the sustainability of end - product demand. This week, refining margins in Europe and the US declined on a sequential basis, while those in Asia remained high. Saudi Arabia and other countries lowered their official selling prices to Asia in July to multi - year lows, and there were market rumors that Saudi Arabia intended to push OPEC+ to continue increasing production by at least 411,000 barrels per day in August and September to consolidate market share. Recently, the valuation repair of Brent and WTI crude oil has been realized, and the focus has shifted to whether geopolitical risks (such as the US - Iran and Israel - Palestine situations) will escalate substantially. High - selling opportunities for absolute prices can be monitored [5]. 3. Summary by Directory 3.1 Market Data - From May 30 to June 6, 2025, WTI increased by $1.21, Brent by $1.13, and Dubai by $0.97. Other indicators such as spreads and refined product prices also showed corresponding changes. For example, the BRENT 1 - 2 month spread increased by $0.15, and the RBOB - BRT decreased by $0.54 [3]. 3.2 Daily News - As of June 3, Brent crude oil speculators increased their net long positions by 8,813 lots to 167,763 lots, reaching a two - month high [3]. - On June 6, the US Treasury imposed a new round of sanctions on Iran, targeting 10 individuals and 27 entities, as well as some entities in the UAE and Asia [4]. - HSBC Research stated that OPEC+ is expected to agree to two significant production increases in August and September, raising daily production by 41,000 barrels and 274,000 barrels respectively. It is also expected that the voluntary production cut of 2.2 million barrels per day will be fully lifted by the end of 2025. However, there is an increased downside risk to the forecast of Brent crude oil at $65 per barrel in Q4 2025 due to weak fundamentals after the summer production increase [4]. 3.3 Regional Fundamentals - In the week of May 23, US crude oil exports increased by 794,000 barrels per day to 4.301 million barrels per day, domestic production increased by 900 barrels to 13.401 million barrels per day, commercial crude inventories (excluding strategic reserves) decreased by 2.795 million barrels to 440 million barrels (a 0.63% decline), and the strategic petroleum reserve (SPR) inventory increased by 820,000 barrels to 401.3 million barrels (a 0.2% increase) [4][5]. - This week, the operating rate of major refineries in China decreased, while that of Shandong local refineries increased. The production of gasoline and diesel in China both increased, with production from major refineries rising and that from independent refineries falling. The sales - to - production ratio of gasoline increased, while that of diesel decreased. Gasoline and diesel inventories decreased significantly. The comprehensive profit of major refineries rebounded on a sequential basis, and that of local refineries improved [5].