Morning Insight：December 17，2025

Morning Insight:December 17, 2025 LinlinGaoCertification：Z0002332gaolinlin@gtht.com Yu Chen Wu (Contact)Certification：F03133175 wuyuchen@gtht.com Main Body Commodity MarketInsight： Crude Oil:Reduce short positions and wait; in the medium to long term,prices may test new lows around USD 50/bbl. Last night, both domestic and overseas oil prices fell sharply again,testing the April lows, in line with our previous expectations. From atrading perspective, we believe that in the short term it is appropriateto selectively reduce short positions andtake profits, while from alonger-term perspective, the strategy remains to sell on rallies. On the supply side, global supply growth is still likely to remain highin 2026, though the structure of incremental supply is changing. Againstthe backdrop of a decline in rig counts in 2025, U.S. shale oil producershave maintained resilient output through technological upgrades such asoptimized fracturing techniques and longer lateral drilling, boostingper-well productivity. In 2026, despite pressures from low oil priceexpectations and rising equipment costs driven by tariff policies, newprojects coming online in the Gulf of Mexico and Alaska may offsetproduction declines in the Lower 48 states. Total U.S. output is expectedto remain stable at around 13.6 million barrels per day. Large producerscan still sustain production due to economies of scale, while small andmid-sized operators face mounting profitability pressures. In addition,OPEC+ has been gradually advancing its production cut exit plan in 2025,with eight countries completing approximately 2.07 million barrels perday of output increases, achieving a completion rate of as high as 80%.Although non-OPEC+ supply growth is expected to slow further in 2026, overall supply resilience remains intact. Offshore projects in countriessuch as Brazil and Guyana will remain the main sources of incrementalsupply, though the scale of additions will be smaller than in 2025.On the demand side, global refining capacity is relatively stable in2025, with a continuation of modest growth expected in 2026. New refinerystartups in emerging markets will provide marginal demand support, butoverall growth is limited and insufficientto reverse the broadly looseglobal crude oil supply–demand balance. Under these conditions, globalcrude oil inventories may continue to build at a pace of at least 1million barrels per day over the next six months, representing a rarelevel of oversupply pressure in recent years. Therefore, we believe that over the next six months the crude oil marketwill likely remain in a complex environment characterized by intensifiedsupply–demand competition, frequent geopolitical disruptions, and areshaping of oil transportation dynamics. The core market contradictionswill revolve around supply resilience, the transmission of geopoliticalrisks, and volatility in shipping markets. The annual price center ishighly likely to continue shifting lower. In particular, inventoryaccumulation isexpected to become the dominant trend in the coming sixmonths, with oversupply pressure clearly evident. In extreme scenarios,Brent and WTI prices may still test USD 50 per barrel, while SC crude maytest RMB 380 per barrel. A sustained trend rebound maynot occur untilthe second half of 2026. Zinc:Resonance between domestic and overseas markets, with zinc pricesfluctuating downward. Yesterday, registered warrants at the LME Singaporewarehouse surged sharply, suspected to reflect the release of holdings bya major market participant. Following thisconcentrated delivery, marketconcentration declined noticeably, and the LME 0–3 structure shifted frombackwardation to contango, indicating a loosening near-term market. Webelieve the recent overseas squeeze-driven rally has largely come to anend. Going forward, as the export window closes, the pace of inventory drawdowns in the domestic market is also expected to slow, and pricingmay return to a bear-dominated market. From a long-cycle perspective, the zinc mining industry is currently atthe tail end of an expansion cycle. Incremental global zinc mine supplynext year is expected to be relatively limited, with additions mainlycoming from several large projects that are still ramping up. On the onehand, it takes time for mine capacity to fully materialize, and there isuncertainty as to whether some projects can reach full utilization nextyear. On the other hand, incremental mine supply is structurallydifferentiated:overseas zinc mine additions are limited, and togetherwith rising production disruptions, a tight balance in zinc concentratesupply may become the norm. This implies continued pressure on treatmentcharges (TCs), with the upside for TCs next year likelysmaller than thisyear, leaving zinc prices with upside elasticity. Overall, we believe supply-side constraints will continue to dominateprice dynamics, while the degree of consumption expansion will determinethe upper bound of prices. As the