On Monday (November 25th), the crude oil market showed a downward trend. The Brent crude oil contract is currently trading at $74.50 per barrel, with a intraday decline of 0.74%; The WTI crude oil continuous contract was reported at $70.56 per barrel, a decrease of 0.94%. Despite a 6% increase in oil prices last week, reaching a new high in nearly a month, market concerns about supply risks and signs of demand recovery are trying to offset the impact of short-term pullbacks.

Geopolitical situation intensifies, market volatility increases

The geopolitical tensions continue to provide support for oil prices. Recently, the escalation of the Russia-Ukraine conflict and the confrontation between Iran and the Western countries on the nuclear issue have triggered the market's concern about supply disruption. Analysts point out that although there are no signs of actual supply disruptions in the short term, the market has already included such potential risks in prices.

At the same time, the progress of the Iranian nuclear issue has also attracted investors' attention. Iran announced the acceleration of the deployment of new centrifuges and plans to hold talks with three European countries on November 29th. If the situation worsens and triggers a new round of sanctions, it could result in restrictions on Iran's daily crude oil exports of approximately 1 million barrels, equivalent to 1% of global supply. These factors collectively raised market expectations of supply shocks, providing bottom support for oil prices.

The signal of demand side recovery appears

The demand side performance has also provided certain support for the market. China and India, as the world's first and third largest crude oil importers, are injecting vitality into the market with their demand recovery. Data shows that China's crude oil imports rebounded in November, thanks to lower oil prices stimulating the demand for replenishing commercial inventories.

On the Indian side, crude oil processing volume in October increased by 3% year-on-year, reaching 5.04 million barrels per day, reflecting India's continued strong demand for exported fuels. As the two major engines of crude oil consumption in the Asia Pacific region, the recovery of demand in these two countries has played a key role in offsetting the negative impact of the slowdown in the European and American economies.

Short term price trends and future prospects

Although the market has cooled down after last week's significant increase, overall, oil prices are still in a relatively strong region. As Brent crude oil seeks support within the range of $70 to $80 per barrel, the market may maintain a volatile pattern in the short term. Technical pullbacks and short-term profit taking may put some pressure on oil prices, but geopolitical tensions and resilience on the demand side are expected to limit the decline.

In the coming weeks, the main drivers of the market will focus on several key events, including the upcoming release of US PCE data and the Federal Reserve's monetary policy meeting in December. Any macro event that affects market risk appetite may amplify the volatility of crude oil prices. Overall, despite the uncertainty in the short-term market, the geopolitical situation and demand recovery will continue to provide support for oil prices in the medium term.