Oil Prices Close October with Long Lower Shadows, Marking Three Consecutive Months of Decline; Plastic Faces Pressure and is Expected to Weaken and Fluctuate This Week

1. Overnight Crude Oil Market Dynamics

On October 31, rumors suggested that the United States might take military action against Venezuela, raising supply risks and pushing international oil prices higher. However, OPEC+ continued its production increase plan, limiting the price rise. NYMEX crude oil futures for December rose by $0.41 to $60.98 per barrel, a week-on-week increase of 0.68%; ICE Brent crude oil futures for December rose by $0.07 to $65.07 per barrel, a week-on-week increase of 0.11%. In China, the INE crude oil futures contract for December fell by 3.1 to 459.4 yuan per barrel, but rose by 4.2 to 463.6 yuan per barrel in the night session.

Market Outlook

Reviewing the trends in the first 10 months of 2025, oil prices have experienced significant fluctuations, with the center of gravity further shifting downward. After October, the price level dropped to the lower range of the year. The disruptions in supply caused by sanctions against Russia once again held the lower support for oil prices. With OPEC+ deciding to continue increasing production in December, oil prices will continue to test the lower support under the pressure of oversupply. However, OPEC's decision to halt production increases in the first quarter is relatively favorable for oil prices. Geopolitical factors will continue to bring disruptions to the market, meaning oil prices are likely to remain volatile in the near future. It is advisable to focus on selling short during price rallies, paying attention to timing.

II. Macroeconomic Trends

Media reports have indicated that the Trump administration has decided to launch attacks on military facilities within Venezuela, and the strikes could occur at any time.Trump denies that he has decided to carry out military strikes against Venezuela.

2、Multiple officials from the Federal Reserve oppose interest rate cuts.Dallas Fed President Logan believes the Federal Reserve...Last week, it was unnecessary to cut interest rates, and I oppose another rate cut in December.Kansas City Fed President Schmid said that voting against a rate cut last week was due to concerns that economic growth and investment would exert upward pressure on inflation; Atlanta Fed Bostic warned the market not to over-interpret the dot plot.A rate cut in December is not a foregone conclusion.Cleveland Fed President Loretta Mester stated that a certain degree of restrictive policy must be maintained to bring inflation back to target and expressed openness to reforming the policy rate target. Overnight index swaps indicate that the probability of a Fed rate cut in December has dropped to about 50%.

3. Kevin Hassett, Chairman of the White House Council of Economic Advisers: It is expected that the U.S. economy will grow by nearly 4% in the third quarter. U.S. Treasury Secretary Bessent:Some economic sectors are in recession, and if inflation decreases, the Federal Reserve should cut interest rates.

5. According to CNN:The U.S. Department of Defense has approved the provision of long-range Tomahawk missiles to Ukraine, with the final decision authority transferred to Trump.

Considering the stable outlook for the global economy and the current favorable market conditions with low inventories, the ministers of the OPEC+ eight countries have decided to increase oil production quotas by 137,000 barrels per day in December and to suspend production increases in the first quarter of next year.

5、Chinese President Xi Jinping attended the 32nd APEC Economic Leaders' Meeting and delivered an important speech.China will host the 33rd APEC Economic Leaders' Informal Meeting in Shenzhen.

6. Ministry of Commerce: Promote the early resumption of negotiations on the China-Japan-South Korea Free Trade Agreement; urge the Japanese side to promptly remove relevant Chinese entities from the export control end-user list; hope to work with Canada towards resolving economic and trade issues of mutual concern.

3. Plastic Market Morning Update

Oil prices edged up slightly on Friday, with October closing with a long lower shadow, marking three consecutive months of decline. Domestic plastic futures main contracts came under pressure and fell.

The plastic 2601 contract is quoted at 6,891 yuan/ton, a decrease of 0.81% compared to the previous trading day.

The PP2601 contract is quoted at 6,587 yuan/ton, down 0.66% from the previous trading day.

The PVC2601 contract is quoted at 4666 yuan/ton, down 1.33% from the previous trading day.

The styrene contract for May 2025 is quoted at 6,565 yuan/ton, up 0.03% from the previous trading day.

4. Market Forecast

PP: Recently, international oil prices have fluctuated widely, and the cost side provides limited guidance to the spot market. From the perspective of PP fundamentals, new maintenance at facilities such as Daxie Petrochemical and Quanzhou Guoheng has increased the shutdown impact to about 20%. However, with the commissioning of the second phase of Guangxi Petrochemical, the supply surplus pattern is difficult to change. Downstream maintains just-in-need restocking, and new orders are lacking. It is expected that the polypropylene market will mainly experience weak fluctuations this week.

PE: On the cost side, the support from production costs for oil-derived products is weakening; on the supply side, the market supply involves the planned restarts of facilities such as Lianyungang Petrochemical and Baolai, as well as the expected ramp-up of new installations at Guangxi Petrochemical, leading to an increase in domestic polyethylene supply and production; on the demand side, it is anticipated that the overall operating rate of downstream industries will slightly increase next week. Currently, the greenhouse film sector is in its peak production season, with production schedules from north to south driving a steady accumulation of orders, pushing the industry operating rate to continue to rise slightly. Overall, the supply and demand dynamics in the polyethylene market are intensifying, and it is expected that prices may fluctuate downwards this week, with a range of 10-50 yuan/ton.

PVC: PVC supply continues to maintain an incremental trend, while domestic demand remains unchanged. Foreign trade exports are cautious due to policies and competition, making it difficult for the supply and demand fundamentals to support the upward trend of PVC spot prices. Short-term fluctuations in costs are weak, and there is insufficient bottom support. Affected by macroeconomic sentiment fluctuations, the PVC market has seen significant adjustments, but the sustainability is lacking. It is expected that spot PVC will trend weakly within a range, with macroeconomic sentiment providing temporary support to the market. The price for calcium carbide-based PVC in East China is expected to fluctuate within the range of 4580-4750 yuan/ton.