The conflict between Russia and Ukraine escalated, and the oil price hit a new high since 2015
This week, the escalation of the conflict between Russia and Ukraine triggered concerns about short-term crude oil supply. The oil distribution price once again stood at $100 / barrel after eight years, a new high since 2015. However, the United States has not imposed sanctions on Russian crude oil for the time being, and international oil prices soared and fell. As of February 25, Brent and WTI crude oil futures prices closed at US $97.93/barrel and US $91.59/barrel respectively, and the US dollar index closed near 96.5.
The number of oil drilling rigs in the United States increased, and the crude oil inventory increased by 4.51 million barrels
This week, the number of active oil drilling in the United States increased by 2 to 522, and the total number of oil and gas drilling rigs increased by 5 to 650. The US crude oil inventory was 416 million barrels, an increase of 4.51 million barrels over the previous week; The total gasoline inventory in the United States was 246.5 million barrels, a decrease of 580000 barrels compared with the previous week; Distillate oil inventory was 119.7 million barrels, a decrease of 580000 barrels compared with 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 conflict between Russia and Ukraine has led to a sharp rise in oil prices, and the US sanctions against Russia have not yet involved the field of crude oil
This week, the geopolitical conflict between Russia and Ukraine escalated in an all-round way, and the international oil price rose sharply. However, the US sanctions against Russia did not involve the field of crude oil, which alleviated the market’s concerns about crude oil supply to a certain extent, and the high level of international oil prices fell. In terms of supply and demand, the demand for crude oil on the demand side continues to recover with the recovery of the global economy, and the supply side OPEC + is seriously lack of surplus capacity, resulting in insufficient production increase. In January, OPEC increased production by only 64000 barrels / day, which is far from the target of 250000 barrels / day. The effective surplus capacity of OPEC decreased, and American shale oil manufacturers failed to significantly increase production due to green investment philosophy and shareholder return requirements, And the shortage of global oil and gas capital expenditure still restricts the repair of short-term crude oil supply, and the supply and demand of crude oil is still tight. In terms of geopolitics, the conflict between Russia and Ukraine has escalated, and the market is highly sensitive to geopolitical events that may lead to tight crude oil supply. It is expected that the conflict between Russia and Ukraine will affect the global energy supply and lead to a sharp rise in oil prices. On February 25, the United States said it would not sanction Russian crude oil, which alleviated the market’s concern about crude oil supply to a certain extent, and the high international oil price fell. Looking forward to the future, we believe that under the background of tight crude oil supply and demand, the short-term geopolitical situation has a great impact on oil prices. In the follow-up, we will focus on the conflict situation between Russia and Ukraine, the sanctions policies of Europe and the United States against Russia, the progress of the negotiation of the Iranian nuclear agreement, the implementation of OPEC + production increase, the spread situation of Omicron virus 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 olefin, 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
