Since the outbreak, crude oil prices outside China have rebounded strongly. From the perspective of price trend, crude oil futures prices outside China showed a “V” rebound during the epidemic. In 2021, the continuous settlement price of Brent crude oil futures and WTI crude oil futures increased by US $25.98/barrel and US $26.69/barrel respectively, with an annual increase of 50.2% and 55.0% respectively. As of February 7, 2022, the continuous settlement price of Brent crude oil futures and WTI crude oil futures closed at US $92.69/barrel and US $91.32/barrel respectively, up about 19.2% and 21.4% respectively from the level at the beginning of the year. China’s ine crude oil price closed at 558.7 yuan / barrel, up about 67.3% year-on-year from a year ago.
Crude oil production gradually recovered, but the growth rate was lower than expected. In December 2021, OPEC crude oil output was 27.882 million barrels / day, which was higher than that since the outbreak, but still lower than the level before the outbreak. In addition, according to the announcement of OPEC + in July 2021, OPEC + will increase the crude oil supply by 400000 barrels / day from August 2021 until it fully covers the previous production reduction of about 5.8 million barrels / day. However, in December, OPEC + crude oil supply only increased by 170000 barrels / day month on month, and the production increase rate of OPEC + crude oil was slower than expected. At the same time, OPEC also made it clear in its previous announcement that the future production increase will depend on the specific market conditions. Therefore, it is expected that the international crude oil supply will be basically stable and will not increase rapidly in the future. In terms of oil drilling rigs, the number of global drilling rigs recovered to 1632 in January 2022, which is still far from the level before the epidemic, resulting in a slow growth of production capacity in the future.
International crude oil inventories continue to bottom, catalyzing the rise of crude oil prices. The crude oil price is contrary to its inventory trend, and the low inventory is conducive to the rise of oil price. From the historical trend of crude oil price and its inventory, when the inventory decreases, the crude oil price shows an upward trend; When crude oil inventories rise, oil prices fall. As of December 2021, the US Non strategic crude oil inventory was 417.20 million barrels, a year-on-year decrease of about 14.1%; As of November 2021, the OECD onshore commercial oil inventory was 1317 million barrels, a year-on-year decrease of about 12.3%.
The economic improvement will stimulate the demand for crude oil, which will continue to expand the gap between supply and demand of crude oil, and the upward trend of crude oil may be difficult to reverse. During the epidemic, countries introduced active fiscal policies to stimulate the accelerated recovery of macro-economy. From the debt situation of countries, the euro area has been in deficit since the outbreak. By the third quarter of 2021, its deficit accounted for 4.78% of GDP, and the cumulative deficit of the US federal government in 2021 was as high as US $2.58 trillion. Under the continuous stimulation of the global central bank, the global economic recovery was obvious, and the GDP of the United States increased by 5.5% year-on-year in the fourth quarter. With the strengthening of macro economy, the operating rate of refineries downstream of crude oil has rebounded significantly. As of December 2021, the operating rate of refineries in the United States has reached 89.82%. Looking to the future, OPEC predicts that the global demand for crude oil will reach 100.8 million barrels per day in 2022, and the supply-demand gap will increase by 1.01 million barrels per day compared with 2021. With the continuous expansion of the supply-demand gap of crude oil, it may be difficult to reverse the rising trend of crude oil price in the future.
Investment advice
The global crude oil production will continue to benefit from China Science Publishing & Media Ltd(601858) and China Science Publishing & Media Ltd(601858) high crude oil prices, such as {6018}.
Risk tips
The US shale oil production has increased rapidly, the OPEC + crude oil production has expanded rapidly, and the US sanctions against Iran have been loosened.
