Market Highlights and Key Data
1. The March delivery light crude oil futures price on the New York Mercantile Exchange fell by $3.07 to settle at $62.14 per barrel, a decrease of 4.71%; the April delivery London Brent crude oil futures price fell by $3.02 to settle at $66.30 per barrel, a decrease of 4.36%. The main SC crude oil contract closed down 4.80%, quoted at 450 yuan per barrel. 2. On February 3rd, US President Trump stated on social media that he was fortunate to speak with Indian Prime Minister Modi this morning. He described Modi as one of his best friends and a highly influential and respected leader of his country. They discussed many topics, including trade and ending the war between Russia and Ukraine. Modi agreed to stop purchasing Russian oil and increase imports from the United States and potentially even Venezuela. This move is intended to help end the ongoing conflict in Ukraine, which claims thousands of lives weekly. Out of friendship and respect for Prime Minister Modi, and at his request, both sides agreed to establish a trade agreement between the US and India effective immediately. Under this agreement, the US will reduce its reciprocal tariffs on India from 25% to 18%. India will also gradually eliminate its tariffs and non-tariff barriers on US goods until they are completely removed. Prime Minister Modi also committed to "Buy American," including purchasing over $500 billion worth of US energy, technology, agricultural products, coal, and various other categories of goods. The partnership between the US and India is expected to grow stronger. President Trump noted that both he and Prime Minister Modi are dedicated to getting things done, a quality he believes most people lack. 3. On February 2nd, following threats of retaliatory tariffs from President Trump, Mexican President Sheinbaum stated that her country would continue to send oil to Cuba on humanitarian grounds through diplomatic channels. According to a government written statement made during an event in Sonora state on Sunday, Sheinbaum also indicated Mexico would send humanitarian aid for other basic products this week. Mexico has become a focal point in the US leader's efforts to pressure the Cuban government. Following reduced supplies from Venezuela, Mexico has become one of the few remaining foreign fuel suppliers for Cuba. For years, Venezuela exchanged heavily subsidized oil for medical and security personnel. Last month, President Trump authorized his administration to impose commodity tariffs on countries supplying oil to Cuba, intensifying pressure on the Caribbean nation. President Sheinbaum warned on Friday that Trump's latest tariff threats against nations supporting Cuba could potentially lead to a humanitarian disaster locally. 4. On January 31st, the Russian government announced on Saturday that it would lift the ban on gasoline exports for oil producers to alleviate inventory pressure. A government statement also indicated that the ban on gasoline exports for non-producing enterprises would remain in effect until the end of July 2026. 5. On January 30th, Russian Deputy Foreign Minister Dmitry Lyubinsky stated that Germany's complete refusal to purchase energy from Russia means there is currently no possibility of resuming energy dialogue with Germany. Lyubinsky expressed that, in order to "accommodate" certain political situations, Germany has entirely refused to buy coal, oil, petroleum products, and pipeline gas from Russia. Consequently, Russia currently sees no prospects for normalizing energy dialogue with Germany. Lyubinsky mentioned that Russia had previously indicated its willingness to resume gas supplies to Germany via the still-intact Nord Stream pipeline spur, provided Germany was willing, but Germany had not responded. Lyubinsky emphasized that the choices made by Germany would inflict damage on its own economy. 6. On February 2nd, WTI crude oil plummeted 6% intraday after President Trump stated over the weekend that Iran was engaged in "serious talks" with Washington, signaling a potential de-escalation with the OPEC member nation. Crude oil had previously touched six-month highs due to heightened US-Iran tensions, with WTI trading near its highest levels since late September. Both benchmarks experienced significant declines on the day.
Investment Logic Last week, amidst a market rally led by precious metals, crude oil demonstrated relative resilience, primarily supported by the situation concerning Iran. Following the emergence of a potential breakthrough in US-Iran negotiations, oil prices fell sharply in tandem with other commodities, effectively squeezing out the geopolitical risk premium. While the Middle East situation may experience fluctuations, the overall direction remains largely in the hands of President Trump. The probability of disruptions affecting the Strait of Hormuz has diminished. On another front, the US-India trade agreement helps explain India's previous reluctance to resume purchasing heavily discounted Russian oil. With the trade deal finalized, India's procurement patterns for Russian oil may undergo new changes.
Strategy Oil prices are expected to experience short-term range-bound fluctuations with high volatility; market risks warrant attention. A medium-term short position allocation is suggested.
Risks Downside Risks: Successful Russia-Ukraine peace negotiations, a US-Iran agreement being reached, macro black swan events. Upside Risks: Supply tightening from sanctioned oil sources (Russia, Iran, Venezuela), large-scale supply disruptions caused by Middle East conflicts.
Investment Advisory Business Qualification: CSF License [2011] No. 1289
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