Key points
The prospect of geopolitical situation is unclear, and the oil price fluctuates at a high level
This week, the situation in Russia and Ukraine was volatile. The expectation of the return of Iranian crude oil could not meet the market's concern about the escalation of the conflict between Russia and Ukraine, and the high level of international oil prices fluctuated. As of February 18, Brent and WTI crude oil futures prices closed at US $93.54/barrel and US $91.07/barrel respectively. The US dollar index closed near 96.1.
The number of oil drilling rigs in the United States increased, and the crude oil inventory increased by 1.12 million barrels
This week, the number of active oil drilling in the United States increased by 4 to 520, and the total number of oil and gas drilling rigs increased by 10 to 645. The US crude oil inventory was 411.5 million barrels, an increase of 1.12 million barrels over the previous week; The total gasoline inventory in the United States was 247.1 million barrels, a decrease of 1.33 million barrels compared with the previous week; Distillate oil inventory was 120.3 million barrels, down 1.55 million barrels from the previous week.
In January 2022, OPEC output increased by 64000 barrels / day to 27.981 million barrels / day compared with the previous month
OPEC output increased in January 2021, with Saudi Arabia's output of 9.999 million barrels / day, an increase of 54000 barrels / day over the previous month; Iraq's output was 4.245 million barrels per day, a decrease of 26000 barrels per day; Iran's output was 2.503 million barrels per day, an increase of 21000 barrels per day over the previous month; Venezuela's output was 668000 barrels per day, a decrease of 50000 barrels per day compared with the previous month; Libya's output was 1.008 million barrels per day, a decrease of 45000 barrels per day compared with the previous month.
This week, the prices of naphtha, ethylene, propylene, butadiene and pure benzene increased, and the price difference of naphtha, PDH and MTO increased.
The situation in Russia and Ukraine is uncertain, and Iran's production capacity is expected to return
This week, the uncertainty of the situation in Russia and Ukraine increased sharply, which exacerbated the market's concerns about the supply side of crude oil. However, Iran's crude oil is expected to return to the market, which has an impact on the supply side, and the high level of international oil prices fluctuated. On the demand side, the total inventory of EIA crude oil and petroleum products has declined for six consecutive weeks since 2022, reflecting the continuous recovery of crude oil demand, and the impact of the epidemic on the economy and crude oil demand is still relatively limited. On the supply side, the problem of insufficient idle capacity of OPEC still exists. The production of shale oil manufacturers in the United States is slow, and the return of Iranian crude oil to the market is expected to offset the difficulty of OPEC production. However, the complex and volatile situation in Russia and Ukraine still exacerbates the uncertainty of crude oil supply. This week, more than 20 countries in the United States and Europe withdrew from Ukrainian embassies. After Russia announced its withdrawal, there was another exchange of fire in eastern Ukraine, and the prospect of the situation between Russia and Ukraine is unclear; Iran's crude oil is expected to return to the market. The US State Department said that the negotiations on the Iran nuclear agreement held in Vienna, Austria this week have made "substantial progress" and may reach a consensus in a few days; At present, Iran still has 1.3 million barrels of idle capacity waiting to return. Iran said that its oil production does not face any problems and can reach the production level before the United States imposed sanctions on it in 2018 by March. The return of Iran's crude oil supply will offset the difficulty of increasing production caused by insufficient idle capacity of OPEC. To sum up, the pattern of tight supply and demand fundamentals of crude oil continues, the geopolitical situation is changeable, and the short-term geopolitical risk premium of crude oil rises. Over the years, affected by the epidemic and low oil price cycle, the global oil and gas exploration expenditure has remained low. We are firmly optimistic about the long-term prosperity of the oil and gas industry. In the follow-up, we will focus on the implementation of OPEC + production increase, the confrontation between Russia and Ukraine, the progress of the negotiation of the Iranian nuclear agreement, the spread of Omikron strain, the progress of vaccination and the development of covid-19 specific drugs.
Investment suggestion: we expect that the global crude oil supply and demand pattern will remain tight in 2022, so we continue to be firmly optimistic about the prosperity of the petrochemical sector. It is suggested to pay attention to the following subscripts: first, the upstream sector, PetroChina, Sinopec, CNOOC, Enn Natural Gas Co.Ltd(600803) ; Second, oil service sector, China Oilfield Services Limited(601808) , Offshore Oil Engineering Co.Ltd(600583) , Cnooc Energy Technology & Services Limited(600968) , Sinopec Oilfield Service Corporation(600871) , Bomesc Offshore Engineering Company Limited(603727) ; Third, large private refining and chemical sector, Hengli Petrochemical Co.Ltd(600346) , Rongsheng Petro Chemical Co.Ltd(002493) , Jiangsu Eastern Shenghong Co.Ltd(000301) , Hengyi Petrochemical Co.Ltd(000703) , Tongkun Group Co.Ltd(601233) ; Fourth, light hydrocarbon cracking sector, satellite chemistry and Oriental Energy Co.Ltd(002221) ; Fifth, coal to olefins, Ningxia Baofeng Energy Group Co.Ltd(600989) ; The sixth and third largest chemical white horse, Wanhua Chemical Group Co.Ltd(600309) , Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) and Jiangsu Yangnong Chemical Co.Ltd(600486) .
Risk analysis: geopolitical risk, the spread of Omicron strain, and the rapid growth of OPEC + production.
