2006 was an extraordinary year. The skyrocketing price of oil greatly expanded people's imagination and subverted traditional thinking.

The super bull market in the international commodity market since June 2003 was still maintained in the first half of 2006.

The investment strategy of international commodity index funds with huge funds to hedge the risk of inflation by buying commodity futures represented by crude oil still dominated the trend of commodity prices in the first half of the year.

After the Federal Reserve raised interest rates for the 17th time at the end of June, NYMEX crude oil surged to a record high on July 14, driven by many bullish factors such as the peak of the U.S. summer drive, hurricane expectations, and the escalation of the Israel-Lebanon conflict.

With the end of this round of interest rate hikes, global inflation expectations have gradually weakened, and the bull market in international commodities represented by crude oil has temporarily come to an end.

The growth rate of the global economy has gradually slowed down amid continued interest rate hikes.

The world commodity craze began to cool down, and funds began to withdraw from the commodity market.

This prevented crude oil from breaking through 80 US dollars in early August by taking advantage of a series of short-term and long-term themes such as the raging Iranian nuclear issue and the hurricane hitting the Gulf. Instead, it embarked on a long bearish path and entered a round of mid-term substantial correction.

By October, crude oil prices had fallen below US$60.

The continued decline in oil prices has caused panic among OPEC oil-producing countries.

OPEC reached an agreement on the evening of October 19 to reduce production and protect prices, and decided to reduce its daily crude oil production by 1.2 million barrels from approximately 27.5 million barrels.

This production cut added some bullish factors to the market, but it failed to effectively promote a rebound in oil prices.

The market has started a tug-of-war around production cuts by oil-exporting countries and continued reductions in demand by oil-consuming countries.

After more than a month of range consolidation, crude oil finally rebounded, driven by OPEC's further production cuts in December and demand for heating oil.

Due to differences in domestic and foreign market backgrounds, there have been some obvious deviations in the trends of crude oil and fuel oil this year: (A) Entering February, international oil prices continued to fall due to the IEA's announcement of a sharp increase in inventories and lowered demand expectations.

Domestic fuel oil prices deviated due to bullish capital expectations for crude oil, and basically closed with a positive line in post-Spring Festival transactions. With both international crude oil and Singaporean fuel oil falling, they embarked on a resistive downward trend.

(B) In late June, crude oil was supported at the previous bottom due to the difficulty in reaching an agreement between Iran and Western countries on the nuclear issue.

Shanghai fuel oil fell further due to the weakness of the Singapore fuel oil market and abundant domestic arrivals, which broke through the previous bottom support level.

(C) In mid-July, the conflict between Israel and Lebanon escalated, the Iranian nuclear issue and North Korea's missile launches stirred up trouble again, and a series of bombings occurred in Mumbai, India. The crude oil market gathered many positive factors for a while, and hit a record high on July 14.

Domestic fuel oil refineries in various places are almost unprofitable due to a significant increase in costs.

The massive reduction in demand dragged down the performance of fuel oil, and Shanghai Oil failed to break through the previous high.

(D) After a round of large-scale adjustments, the trends of fuel oil and crude oil began to diverge. The trend of fuel oil showed weakness, with narrow intraday volatility, and significant shrinkage in trading volume and open interest.

Part 2 2007 Crude Oil Market Analysis 1. The pace of world economic growth slowed down. The US GDP growth rate declined significantly in 2006, and investors began to suspect that the US economy had reached an inflection point.

This triggered market concerns about reduced demand for crude oil, setting the tone for a correction in oil prices in 2006.

At the same time, the slowdown in the U.S. economy means that interest rate hikes will come to an end.

The last time the United States raised interest rates was at the end of June. At this point, the pace of 17 consecutive interest rate hikes of 25 basis points since June 2004 finally came to a halt.

This round of decline in the US GDP growth rate is mainly caused by the cooling of real estate, and real estate mainly affects the US economy through investment, consumption and employment. The actual impact on the economy will not be too great, and the adjustment period will not be too long.

The decline in oil prices and housing prices in 2006 also eased inflationary pressure in the United States.

The United States has strong macro-control capabilities.

The purpose of the United States is also very clear: overseas expansion. In addition, the healthy economic development in other parts of the world has also boosted U.S. trade exports and promoted the U.S. economy. Therefore, there are signs of slowing down the development of the U.S. economy, but it is unlikely to decline.

Although global economic growth is expected to slow next year, it will only slow slightly.

2. The relationship between world oil supply and demand has improved. Concerns about crude oil supply have been driving oil prices to new highs in recent years.

While oil prices continue to rise, high oil prices have also led to the weakening of global oil consumption growth and the expansion of production.

The resulting changes in the supply and demand relationship of crude oil may end the bull market in crude oil for several years.

In October 2006, the International Energy Agency lowered the world oil demand growth rate by 0.1% in both 2006 and 2007. The demand growth rate in 2006 was lowered from 1.2% to 1.1%, and the oil demand growth rate in 2007 was lowered from 1.8% to 1.1%.

1.7%, or 85.9 million barrels per day.

Demand from China remains strong.

In 2006, China's oil demand growth accounted for more than 30% of global growth.