The prospect of the conflict between Russia and Ukraine is unclear, and the oil price rebounded after falling
The conflict between Russia and Ukraine continued this week. The negotiations between the two sides resumed but the progress was uncertain. The international oil price fluctuated violently, and the Brent crude oil futures price rebounded after falling below US $100 / barrel. As of March 18, Brent and WTI crude oil futures prices closed at US $107.93/barrel and US $104.70/barrel respectively, and the US dollar index closed near 98.2.
The number of oil drilling rigs in the United States decreased and crude oil inventories increased by 4.35 million barrels
This week, the number of active oil drilling wells in the United States decreased by 3 to 524, and the total number of oil and gas drilling rigs was the same as last week to 663. US crude oil inventories reached 415.9 million barrels, an increase of 4.35 million barrels over the previous week; The total gasoline inventory in the United States was 241 million barrels, down 3.62 million barrels from the previous week; Distillate oil inventory was 114.2 million barrels, an increase of 330000 barrels over the previous week.
In February 2022, OPEC output increased by 440000 barrels per day to 28.473 million barrels per day compared with the previous month
OPEC output increased in February 2022, with Saudi Arabia’s output of 10.193 million barrels / day, an increase of 141000 barrels / day over the previous month; Iraq’s output was 4.268 million barrels per day, an increase of 36000 barrels per day over the previous month; Iran’s output was 2.546 million barrels per day, an increase of 44000 barrels per day over the previous month; Venezuela’s output was 680000 barrels per day, an increase of 21000 barrels per day over the previous month; Libya’s output was 1107000 barrels per day, an increase of 105000 barrels per day over the previous month. This week, the prices of naphtha, ethylene, propylene and pure benzene fell, butadiene rose, naphtha and PDH spread rose, and MTO spread fell.
The risk of Russian crude oil supply rose, and OPEC + maintained its production target
The prospect of the conflict between Russia and Ukraine this week is unclear, and the oil price fluctuates violently under the influence of geopolitics. On the supply side, the IEA released a monthly report this week, believing that the obstruction of Russia’s crude oil export may increase the supply side risk. Russia is the world’s largest exporter of oil and petroleum products, supplying 8 million barrels / day of crude oil and refined oil to the world. The IEA expects that from April, with the implementation of sanctions and the avoidance of buyers, Russia’s crude oil supply may be reduced by 3 million barrels / day, or cause an impact on global oil supply; In addition, it will take time for Iranian crude oil to return to the market after the suspension of Iran’s nuclear negotiations. As of the end of January, the OECD inventory was 2.621 billion barrels, 335 million barrels lower than the average annual level of 20172021, which is at a low point in nearly eight years, exacerbating the tension of crude oil supply. In February 2022, OPEC increased production by 440000 barrels per day, significantly exceeding its production quota of 250000 barrels per day. However, OPEC + still adhered to the production increase plan of 400000 barrels per day. IEA believes that Saudi Arabia and the United Arab Emirates, which have a large amount of idle capacity in OPEC member countries, are not willing to increase production, and OPEC’s production increase can not make up for the supply gap that may be caused by Russia’s crude oil withdrawal from the market. On the demand side, due to the soaring oil price caused by the conflict between Russia and Ukraine and the sanctions against Russia will inhibit global economic growth, IEA lowered the demand growth forecast for 202122 by 950000 barrels / day to 99.7 million barrels / day; IEA pointed out that developed economies can reduce demand by 2.7 million barrels per day through home office and highway speed limit, so as to curb oil demand and deal with supply side risks. 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: due to the tense geopolitical situation and tight global crude oil supply and demand pattern, we expect the oil price to remain high and 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) , Zhongman Petroleum And Natural Gas Group Corp.Ltd(603619) ; 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.
