Abstract: Oil source of the third member of Paleogene Funing formation in Qutang sub Sag,Hai'an Sag in Subei basin was mainly from source rock of the second member of Funing formation.The effective source rock of the second member of Funing formation in the study area,which belonged to good source rock,with characteristics of favorable thickness,high abundance of organic matter,good type and mature evolution stage.Therefore,it provided sufficient oil source for reservoir of the third member of Funing formation in the study area.The third member of Funing formation widely developed sandstone,and it belonged to the middle porosity-low permeability reservoir,with favorable reservoir properties.Lacustrine mudstone of the fourth member of Funing formation was the regional seal of the third member of Funing formation,which had good seal ability and was beneficial for hydrocarbon preservation.The migration pathway of the third member of Funing formation was mainly faults and micro fractures which undercut to the second member of Funing formation.Oil and gas generating from the source rock of the second member of Funing formation in the drive under abnormal pressure migrated upward to the third member of Funing formation reservoir.