Supply and demand determine the price of crude oil. Unless the economy of China, as a big energy consumer, improves significantly in the second half of this year, the demand side is unlikely to improve significantly next year. The supply side is the key to affect the price of crude oil. At present, Saudi Arabia, the leader of the Organization of Petroleum Exporting Countries, has a deficit of 20 16, the economy is going down, the local currency has depreciated sharply, and it is in a dilemma, reducing production, but it is afraid of giving other oil-producing countries the opportunity to seize market share. Failure to cut production and boost oil prices will also reduce national income, make ends meet and lead to a high deficit. As the chairman of the Organization of Petroleum Exporting Countries (OPEC), Saudi Arabia will greatly help its economy if it can unite with other OPEC oil-producing countries to reduce production and boost prices. Iran lifted the ban on crude oil export 20 16, which has been included in the price. The real implementation will not have much impact on the price of crude oil. Even if there is, it is a fact of buying and selling.

After all, crude oil is a commodity and always has its price. You can't keep falling to zero. Although the downward trend of crude oil has not changed, it does not rule out falling below $30/barrel, but the short-selling space has been severely compressed, and we do not recommend shorting. Wait for the right side to do more and never guess the bottom. If the demand side (China) does not significantly improve the expectation, it is expected that 20 16 crude oil will fluctuate in the bottom area between 28-50 USD/barrel, and short-term pull-up is not ruled out, but the sustainability may not be very long.

Major risk events: OPEC members jointly reduce production or China's economy improves.