Main contents:
How will the four uncertainties of oil price be deduced? A. The situation in Russia and Ukraine is disturbed and sanctions are increased. Will Russia strategically reduce production?
The IEA warned that Russian production may decline by 3 million barrels per day in April. B. Will OPEC + release the real output while raising the baseline output in May? OPEC + has the ability to significantly increase the real output in a single month, but under the background that the output recovery of the largest competitor, the United States, is slow and OPEC’s internal fiscal revenue has yet to recover, OPEC + may not have the motivation to significantly increase the real output in a single month. C. Can the negotiation of the Iranian nuclear agreement be reached quickly and can the production be released quickly? Iran’s energy minister said that if the agreement is reached, the maximum production capacity can be reached within 1-2 months (incremental release of 1.5 million barrels / day of crude oil supply), but the recent negotiations have experienced twists and turns. D. Is it possible for us shale oil to be encouraged by policy and increase production rapidly again? The number of leading indicator rigs shows that it is difficult for the United States to produce large quantities quickly in the short term, and the long-term environmental protection proposition of the Democratic Party of the United States has also hindered the recovery of its local production. However, considering that the United States is currently in the mire of stagflation, curbing inflation before the mid-term election is the key to the current economic policy of the United States, and whether shale oil may play the role of “revealing the bottom” of crude oil supply within the year is hopeful and uncertain. In the short term, the main body of other oil producing countries may be difficult to provide incremental supply matching the potential reduction of production in Russia, and the oil price may still fluctuate at a high level in the first half of the year. The share of OPEC + countries in the process of increasing production in this dimension is likely to be lower than that in 1985, but the share of non OPEC + countries in the process of increasing production in this dimension is likely to be lower than that in 2014. Especially in the context of the accelerated tightening of the Federal Reserve and the cooling of global demand for industrial products, increasing production, reducing prices and ensuring share are more favorable for the long-term oil revenue prospects of OPEC traditional oil producing countries. If the US shale oil production is reversed to rapid production in the second half of the year, it may even further strengthen the OPEC production increase motivation. The possibility of further release of crude oil supply after the second half of the year is greater than reduction. At this time, it may be seen that the oil price drops periodically.
Under the pressure of short-term imported inflation, the flexibility of double carbon target has been greatly improved, which aims to ensure the price stability of China’s coal metallurgy industry chain with supply and demand as the main pricing, and ensure the supply capacity and toughness of China’s industrial chain. The high oil price transmits PPI of China Petroleum & Chemical Corporation(600028) chain, which intensifies the pressure of imported inflation and causes two major risks: 1) Petrochina Company Limited(601857) chemical industry chain is not closed-loop in China, and the high oil price brings huge cost pressure to the middle and lower reaches of China Petroleum & Chemical Corporation(600028) industry chain. 2) Rising costs may eventually inhibit domestic demand from swallowing industrial production. Since last year, industrial production has weakened in the industrial chains related to bulk price increases. In this context, this year’s two sessions have provided considerable policy flexibility for the “double carbon goal”, emphasizing that based on the basic national conditions dominated by coal, they try to stabilize the linkage relationship between coal and electricity prices by stabilizing China’s coal supply, and strive to ensure that the inflation pressure of China’s industrial products is less than that of overseas developed countries through the price stabilization measures of China’s coal metallurgy industrial chain with the cycle of supply and demand, so as to ensure and stabilize the resilience of China’s industrial chain supply capacity, In order to strive for a more favorable position of the industrial system in the trend of anti globalization. If the coal supply can be effectively increased and maintained at a high level in the future, and the policy guidance of “reasonable coal production capacity and abundant output” can be realized, the decline of product prices in all industries of the coal metallurgy industry chain is expected to ease the rise of PPI, making it possible that the rise of PPI in China is significantly lower than that in major developed countries. In the benchmark situation, the annual average PPI is expected to be about 4.0% year-on-year, with the first high and then low falling quarter by quarter. However, if the implementation intensity of the coal supply and price stabilization policy is insufficient, the PPI may exceed the benchmark level.
In the first half of the year, PPI may further transmit to CPI consumer goods, which may once again form a certain demand inhibition effect.
Affected by the possible reduction of Russian crude oil production in the second quarter, the high oil price may slow the decline of PPI, and may also form a direct transmission effect on CPI industrial consumer goods and vehicle fuel, which may promote the overall CPI to rise by nearly 2 percentage points year-on-year in the next four months. It is expected that the CPI in June may reach a high level of 2.7% year-on-year. After the strong transmission from PPI to CPI, it will also bring a strong “demand inhibition effect”. It coincides with the beginning of optional consumption in the second quarter or the endogenous downward pressure formed with the decline in the growth rate of early residential completion. It is difficult to be optimistic about the consumption demand of optional commodities of Chinese residents in the second quarter. On the other hand, large-scale pig breeding has a certain smoothing effect on the fluctuation range of pig cycle. In addition, the change of meat consumption preference has also strengthened the stability of pork price. It is expected that the upward price of this round of pig cycle is limited, which will moderately ease the upward pressure of overall CPI.
Under the background that the epidemic continues to slightly curb rent and service prices, the possibility of continuous high CPI throughout the year is low, and it may gradually fall from a high level in the fourth quarter. The year-on-year average CPI of the whole year is expected to be about 2.1%. If the oil price remains high in the second half of the year, the annual average CPI may reach 2.2%. If the oil price drops more than expected in the second half of the year, the average CPI is expected to be 1.9%.
