Zhang Dihui: The freezing production attempt failed on September 7, and spot asphalt/crude oil entered a new phase of decline

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Zhang Dihui: Failure of the production freeze on September 7 led to a new decline in spot asphalt and crude oil prices. From September 26 to September 28, OPEC will hold an informal meeting in the capital of Algeria, and the market is once again betting on whether there will be a production freeze. Every time such attempts are made, they end without any result; this topic wastes as much time as the Federal Reserve’s interest rate hikes do. 　　Four months have passed since the last meeting, and the oil-producing countries have each made new progress along their own paths. Could the outcome of this meeting be an exception? It is likely that OPEC will fail to reach an agreement on production cuts in September. In my opinion, the willingness of these oil-producing countries to cut production has increased significantly compared to four months ago; however, if we think back to the last Doha meeting, despite its large-scale efforts, it ultimately failed. The main issue preventing an agreement on production cuts at present is the problem between Iran and Saudi Arabia. Assuming an oil production cut agreement is reached among OPEC countries, it would be U.S. shale oil that benefits from this situation; such an agreement would then lead to a surge in shale oil production, ultimately rendering the cut agreement counterproductive. 　　Overall, the chances of a production freeze in September are very slim, and oil prices will likely continue to fall. Investors are advised to continue shorting as the market rebounds. 　　For international crude oil, the key level to watch is 45.4 dollars; for Longsheng asphalt, it’s 4260–4280. (These levels are based on the author’s platform; for more detailed information, please contact via WeChat: fam752)