Recently, international oil prices once again experienced a strong rally, with WTI crude oil (West Texas Intermediate) futures prices fluctuating around the $100 per barrel mark, while Brent crude oil futures briefly rose above $110 per barrel before pulling back. On October 20 Beijing time, the December Brent crude contract traded intraday at $109.94 per barrel, up 0.71%, with open interest of 425,000 lots; the November WTI crude contract traded intraday at $103.99 per barrel, up 0.81%.
Liu Jin, chief macroeconomic analyst at COFCO Futures Research Institute, told reporters that the current upward drive in international crude oil futures prices mainly comes from two main lines: first, further escalation of geopolitical conflicts in the Middle East; second, US September macroeconomic data exceeding expectations, reinforcing the asset inflation repricing logic. Energy prices have become the core driver of this round of inflation rebound, with gasoline and diesel prices rising sharply and gradually transmitting to transportation, trade, and some industrial costs, which means international crude oil is not only driven by geopolitical risks but also incorporated into the "energy-inflation-interest rate expectations" trading chain.
Li Qi, a researcher at the Investment Consulting Department of Zhongyan Futures, stated that the fundamental support for this round of oil price increases lies in geopolitical risk disruptions in overseas markets, restricted passage on key transportation routes, and repeated supply disruptions at oil production facilities and refineries. Overall, the supply side has lost stable output volumes. "The foundation for international oil prices to maintain high-level fluctuations in the short term remains, but there is a lack of linear upward support."
Since the fourth quarter of this year, international oil prices have generally maintained an upward trend, with WTI crude oil futures prices continuously strengthening from $86 per barrel, during which they even recorded a "seven consecutive positive sessions" rally. Regarding whether short-term oil prices can continue to rise, Liu Jin believes that crude oil futures prices are currently in a high-level bull-bear intertwined pattern, and the market may show a surge followed by a pullback in the future. Conditions for a sustained one-sided upward attack are not sufficient, and short-selling pressure is gradually increasing.
Zhao Xiaoxiao, head of the Anliang Futures Research Institute, told reporters that the main support for this round of oil price increases remains supply shortage, and the current high-level center of oil prices is difficult to shake. "Geopolitical conflicts have not yet shown substantial easing, and the risk premium is unlikely to dissipate quickly. Coupled with renewed uncertainties on the supply side, oil prices could surge significantly. However, high-level volatility will gradually increase, and attention needs to be paid to the possibility of phased easing. If supply-side uncertainties are eliminated, the premium will be quickly released, causing significant fluctuations."
Analysts believe that the core of current crude oil asset allocation lies in the rebalancing between geopolitical risk drivers and continuously revised-down demand expectations; oil prices will maintain high-level wide fluctuations in the short term, making speculation very difficult, and allocation logic should prioritize hedging risks rather than one-sided betting on direction.
"The core of crude oil asset allocation is mainly to control risk premiums and reserve return resilience," Li Qi said. The upstream supply side is the priority carrier for the logic of systemic upward shift in oil price centers. Its pricing basis is that after the center shifts upward, the duration value of corporate free cash flow is repriced. While some premiums are given back, the center price remains firm, and corporate cash flow and dividend safety cushions remain effective. Currently, risk hedging work against oil price pullbacks should be done well.
In Zhao Xiaoxiao's view, crude oil, fuel oil, and other bulk commodities are currently priced relatively strong, and attention needs to be paid to high-level volatility risks, but downstream chemical products may have catch-up potential. "Sustained high crude oil prices will affect US inflation levels, thereby bringing tightening expectations to Federal Reserve policy. If the rate hike cycle starts again, it may trigger a new round of adjustments in global financial markets. Investors can allocate short-term safe-haven assets such as government bonds to avoid risks."
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