Introduction to this report:
Contrary to the market view, we believe that liquidity and demand are not the only factors that determine the direction of oil prices. Under the tight balance of low inventory, the importance of supply is rising. And we believe that the oil price center will maintain a high level from 2022 to 2023.
Summary:
Under the background of rising geopolitical risks in 2022, the vulnerability of the global crude oil supply chain will appear, and high oil prices will become the norm. ① recommended upstream varieties: CNOOC (0883. HK), Petrochina Company Limited(601857) ( Petrochina Company Limited(601857) . SH), China Oilfield Services Limited(601808) ( China Oilfield Services Limited(601808) . SH). ② With the rise of oil price and the improvement of the competitiveness of coal chemical industry and light hydrocarbons, Ningxia Baofeng Energy Group Co.Ltd(600989) ( Ningxia Baofeng Energy Group Co.Ltd(600989) . SH) and satellite Chemistry ( Zhejiang Satellite Petrochemical Co.Ltd(002648) . SZ) are recommended.
We believe that the direction of commodity prices is not only determined by demand and liquidity; On the premise of low inventory level, the importance of supply factors increases. The conflict between Russia and Ukraine is not the core reason for the rise in oil prices, but a catalyst.
The fundamental reason for the central rise of oil price lies in the lack of elasticity at the supply side due to the lack of long-term capex investment; Even if there is no conflict between Russia and Ukraine, the rise of oil price center is also an inevitable event. The certainty of high oil price in 20222023 is strong, but the specific price center in 2023 needs to be judged in combination with the supply elasticity of American oil and gas industry in 2023 and the impact of high price on demand. In 2022, the supply side lacks elasticity. The release of OPEC idle capacity will be lower than expected, European oil companies will be transformed, while American oil companies are facing serious supply chain problems; We judge that the crude oil price center in 2022 may be close to US $100 / barrel. At the same time, if geopolitical events exceed expectations, the risk of further upward oil prices will not be ruled out. In combination with the recent escalation of European and American sanctions against Russia, we believe that every reduction of 1 million barrels / day of supply may increase the price upward risk of $20 / barrel. In 2023, it is necessary to continuously track the supply elasticity of the U.S. oil and gas industry. If the supply is lack of elasticity, the possibility of further upward movement of the center will not be ruled out. Even if high prices eliminate some demand, we believe that the rebalanced crude oil price center will increase. We believe that the middle and low oil price center of $40-60 / barrel will become history. At the same time, due to the recent reduction of open positions, we believe that it is normal for liquidity to decline and volatility to become larger.
We have different perceptions of geopolitical events from the market. Even if the conflict between Russia and Ukraine eases, from the perspective of market sentiment, the rise of bulk commodities may slow down in the short term, but the long-term impact on crude oil supply is irreversible, and the market may underestimate the long-term impact. It is mainly reflected in the following four points: ① the impact of the actual crude oil embargo. ② Short term and long-term impact on Russian crude oil production. ③ The change of EU crude oil and natural gas trade territory will lead to the rise of transaction friction costs. ④ The restriction of logistics and transportation may cause confusion in the supply chain. ⑤ Self amplification exists in the industry. In addition, we believe that progress has been made in the Iranian nuclear negotiations, but there are still variables before the final goal is achieved. The return of Iranian production will make a limited contribution to the supply of crude oil in 2022.
Despite the long-term decline in crude oil demand, the time window of supply-demand mismatch may be caused by the lack of supply elasticity. Transportation is only part of the downstream consumption of crude oil, not all. According to rystad energy, on the premise of a slight increase in capital expenditure in 2022, the global crude oil production may peak in 2024, earlier than the peak time of the market expected crude oil demand from 2028 to 2030.
Risk tip: the global economic recession exceeded expectations, the global epidemic rebound exceeded expectations, and the global release of war reserves exceeded expectations
