WTI crude oil has started a 2-week rebound trend since October 18th. After breaking through the high of 92.34 on November 7th and October 10th, it failed to stabilize and prices quickly fell in the late trading session. On Tuesday, prices continued to decline, falling below the 90 point mark and closing down about 3.6%.

We have been tracking crude oil for a month since early October, and our overall approach is mainly bearish. The core logic that supports our bearish outlook is that the economy will rapidly cool down and fall into recession in a high interest rate environment, with Europe possibly entering a recession at the earliest. From recent statements by European Central Bank officials, they have always been positive about raising interest rates, committed to bringing inflation back to the target of 2%, and have prepared expectations for the economy to enter a recession. It is likely that quantitative tightening policies will begin in 2023, which will further increase the impact on the economy.

The recent rebound in oil prices has been influenced by various factors, such as the expectation of the Federal Reserve slowing interest rate hikes, which has led to a continuous decline in the US dollar, and the possible relaxation of China's epidemic control policies, which may drive demand growth. But this is only a short-term positive news, and the actual situation is that the US terminal interest rate may be higher than previously expected. Although there will be a slowdown in interest rate hikes, it may be a series of small interest rate hikes, further expanding residents' loan costs, severely suppressing other living expenses, and thus reducing overall social demand. Enterprises are suppressing costs through layoffs and reduced production, and the bearish trend of commodity prices cannot be avoided. On the Chinese side, even if there is a possibility of relaxing control, the export growth rate has fallen into a downward trend based on recent data. Currently, the focus of the Chinese economy is on expanding infrastructure investment and stimulating domestic demand. However, based on the current epidemic situation, the epidemic rebounded rapidly again in November, and policy will be cautious, so demand growth may be lower than market expectations.

From the current structure, oil prices have quickly fallen after a brief breakthrough in downward resistance and returned to the downward trend. Currently, it can be judged as bullish behavior, so our current strategy is still mainly bearish (with prices below 90). First objective below: 81.3.