Last Tuesday, the International Energy Agency (IEA) pointed out in its latest annual World Energy Outlook report that, based on the current policy scenarios of governments, global demand for oil, natural gas, and coal will peak by 2030, and the number of electric vehicles will relatively increase tenfold, which weakens the reason for increasing investment in fossil fuels.

01 | The process of transforming clean energy is unstoppable. According to the IEA's annual World Energy Outlook released on Tuesday, in the baseline scenario, global crude oil daily consumption will peak at 102 million barrels by the end of 2020, and will drop to 97 million barrels by the middle of this century. IEA Director FatihBirol stated in the announcement that the world is transitioning towards clean energy and is unstoppable. The argument that oil and natural gas represent safe or reliable choices for the future of world energy and climate seems to be weakening compared to before. The IEA stated that oil demand in the petrochemical, aviation, and shipping industries will continue to grow until 2050, but given the astonishing growth in electric vehicle sales, it is not enough to offset the declining demand in the automotive transportation sector.

02 | Domestic finished oil prices have been lowered for the eighth time. On October 24th, the National Development and Reform Commission announced that based on recent changes in international market oil prices and the current mechanism for forming finished oil prices, starting from 24:00 on October 24th, 2023, domestic gasoline and diesel prices (standard products, the same below) will be reduced by 70 yuan per ton. The price of 92 # gasoline, 95 # gasoline, and 0 # diesel will be reduced by 0.05 yuan, 0.06 yuan, and 0.06 yuan respectively. The decrease in finished oil prices this time is mainly caused by the fluctuation and decline of international oil prices during the price adjustment cycle, resulting in the crude oil change rate always hovering within a negative range. According to the monitoring by the Price Monitoring Center of the National Development and Reform Commission, during the current round of refined oil price adjustment period (October 10th to October 23rd), on average, the oil prices of London Brent and New York WTI decreased by 1.93% to 2.30% compared to the previous adjustment period. Due to the significant decline in crude oil at the end of this pricing cycle, it will continue to fluctuate in a negative range after entering a new pricing cycle. The change rate on the first working day after the price adjustment will be -1.25%, corresponding to a decrease of around 100 yuan/ton for gasoline and diesel. After entering a new pricing cycle, there is still downward pressure on international crude oil prices, and domestic retail prices may experience three consecutive declines. In addition, the United States has suspended some energy trade sanctions in Venezuela for six months, leading to potential growth in global crude oil supply. Speculative funds have sold crude oil futures, causing international oil prices to plummet by 3% at one point. However, local geopolitical conflicts are still ongoing, and the market is concerned that the expansion of conflicts will disrupt production and transportation, which to some extent has boosted international oil prices and significantly narrowed their decline.

03 Jingtai Discussion | What is the Future Oil Price Trend? There are many factors that affect the rise and fall of oil prices, and the fundamental factor is nothing more than changes in the supply and demand relationship. When there is a shortage of supply in the crude oil market, prices will rise, and when there is an oversupply, prices will fall. The changes in the supply and demand relationship in the crude oil market are mainly influenced by the following factors. One is the global economic situation. The changes in crude oil prices are closely related to the changes in global economic conditions. During periods of economic prosperity, the demand for crude oil will increase, making it easier for oil prices to rise. However, during periods of economic recession, due to a decrease in demand, oil prices are likely to decline. The significant increase in oil prices in the past few years has been related to the global economic recovery. Another issue is whether the crude oil supply of oil producing countries can be improved. With the unchanged demand for crude oil, only with an increase in supply can oil prices possibly fall. However, it may be more difficult for oil producing countries to increase their crude oil supply. At present, the crude oil market focuses on the changes in the situation in the Middle East. If the situation continues to cool down, there is a high possibility of a decrease in oil prices; If there are repeated or new factors on the news surface that make the situation tense again, oil prices will rise, correct and cool expectations. The Price Monitoring Center of the National Development and Reform Commission predicts that in the short term, tensions in the Middle East will continue to provide some support for international oil prices. However, due to the impact of the global economic downturn, the slowdown in demand side growth will still bring pressure to the operation of international oil prices. Under the influence of multiple factors, the fluctuation of high international oil prices may be significant.