What changes in views on cyclical stocks have occurred in the market this week?

目前原油市场供应预期仍围绕地缘局势的发展有所摇摆，在此期间价格大幅波动消化风险。近期由于欧美难以在对俄石油制裁措施方面继续加码，短线或面临一定回落压力。

But if it is gradually confirmed that the substantial reduction in Russian oil exports in the later period, under the sharp contradiction between supply and demand in the near term background, the near-month contracts will continue to receive support, and the high-level oscillation trend will be difficult to change. Medium-term attention needs to focus on the bearish effects of the marginal improvement in the Russia-Ukraine situation leading to the normalization of Russian oil exports, the accelerated pace of OPEC production increases, and other factors.

The global easing of geopolitical tensions has somewhat cooled market sentiment, but recent non-planned supply disruptions have intensified the tightness in crude oil supply, providing support to the oil price trend. In the short term, it is expected that the oil price will maintain a high-level oscillation, with a narrower expected range of fluctuations. From a technical perspective, it tends to form a converging triangular pattern, with an overall reduction in operational space.

Plans by major oil-consuming countries such as the USA to release strategic oil reserves have put short-term pressure on oil prices. However, the current tight supply of crude oil and low inventories still support oil prices. Short-term trends are expected to be weakly oscillating, but overall it is expected to maintain a high-level range of operation. The recommendation for operation is to seize band trading opportunities.

We believe that there are several indicators that can be tracked: first, when the market is bullish but prices do not continue to rise. This is a commonality in all commodity trading, and there is no need to elaborate further. The second point to observe is whether OPEC countries with spare capacity, such as Saudi Arabia and the UAE, are important in terms of their statements on production and the actual production growth rate.

The third point to observe is when the cracking spread of finished oil turns downward, with the decline even beginning to drag down refinery operating rates. End-users cannot bear high prices of finished oil, and the price of finished oil rises slower than that of crude oil, which is the most direct evidence of declining crude oil demand. The fourth point is to observe whether there are significant bearish factors on a macro level, such as a deteriorating trade environment, the inability of Europe and the USA to bear high energy prices, economic downturn, and other factors.

The potential release of SPR will help the crude oil market achieve supply-demand balance this year. However, in the long term, it will not help solve the structural supply shortage problem that has formed over the years. Looking ahead, due to the possible increase in demand after 2022 and the decrease in shale oil supply, while also facing the potential replenishment demand for SPR inventory, overall, it will drive oil prices up to $115 per barrel in 2023, higher than the current forecast of $110 per barrel.

In the short term, the release of SPR is expected to limit high oil prices, but it is unlikely to fully offset the supply gap of Russian crude oil. In the long term, this may lead to a shortage of SPR in the summer when demand typically recovers. For oil prices, this represents a potential upward space.

We believe that oil price shocks may become a catalyst for the transformation of inflation pressure into growth pressure: High oil prices not only squeeze out consumption, but also increase production costs, fueling inflation pressure, leading to accelerated tightening of overseas monetary policies, ultimately forming growth pressure, and even recession risks. Looking back over the past 50 years, almost every economic recession has been preceded by a significant rise in oil prices. In the 9 interest rate hike cycles by the Fed, the U.S. economy has entered a recession 7 times after the rate hikes, only achieving 'soft landings' twice (the rate hike cycles of 1983-84 and 1994-95).

Under the impact of oil price, the US and European economies are unlikely to fall into recession this year, but the market may trade the risk of recession in advance. The impact on investment theme includes: the ten-year US Treasury bond yield may end the one-way trend and enter a two-way fluctuation stage; if inflation pressure eases, focus on the shift in growth style; long-term value increase in gold allocation.