The conflict between Russia and Ukraine continued and oil prices rebounded sharply
The conflict between Russia and Ukraine continued this week. Under the background of geographical conflict, emergencies at the crude oil supply side continued, the international oil price rose sharply, and the Brent crude oil futures price broke through US $120 / barrel again. As of March 25, Brent and WTI crude oil futures prices closed at US $120.65/barrel and US $113.90/barrel respectively, and the US dollar index closed near 98.8.
The number of oil drilling rigs in the United States increased and crude oil inventories decreased by 2.51 million barrels
This week, the number of active oil drilling in the United States increased by 7 to 531, and the total number of oil and gas drilling rigs increased by 7 to 670. The US crude oil inventory was 413.4 million barrels, down 2.51 million barrels from the previous week; The total gasoline inventory in the United States was 238 million barrels, down 2.95 million barrels from the previous week; Distillate oil inventory was 121.1 million barrels, down 2.07 million barrels from 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, naphtha, ethylene and butadiene rose, propylene and pure benzene fell, MTO spread rose, and naphtha and PDH spread fell.
Under the background of geopolitical conflict, the tension of crude oil supply intensifies, and the final Iranian nuclear agreement is close to being reached
This week, the conflict between Russia and Ukraine continued, the geopolitical situation was tense, and emergencies significantly pushed up oil prices. On the supply side, under the background that Europe is considering joining the US crude oil sanctions against Russia, Russia said this week that the berth damaged by the storm needs to be repaired and the CPC pipeline connecting Central Asia to the black sea will be completely closed. The total capacity of the pipeline is about 1.4 million barrels / day, accounting for about 2.5% of the global seaborne crude oil trade and two-thirds of Kazakhstan’s crude oil exports. Russia said that the pipeline may be cut off for up to two months; The United States and the European Union are close to reaching an important energy agreement to ensure that the United States supplies natural gas and hydrogen energy to Europe, aiming to ultimately reduce Europe’s dependence on Russian energy; In addition, this week, Hussein armed attacked crude oil facilities in Saudi Arabia. The Saudi Foreign Ministry issued a written statement saying that Saudi Arabia will not be responsible for any oil shortage in the international energy market; In terms of Iran’s nuclear negotiations, Iran said this week that the negotiations between the parties involved in the comprehensive agreement on Iran’s nuclear issue are close to reaching and are ready to announce the final agreement. On the whole, the supply gap from Russia has been further enlarged. OPEC member states led by Saudi Arabia still lack the willingness to increase production, and the tension on the crude oil supply side has intensified. The market urgently needs the return of Iranian crude oil to narrow the supply gap. On the demand side, the impact of overseas Omicron on the economy has gradually subsided. The resumption of work and production in major economies has brought rigid oil demand. The total EIA inventory of the United States has fallen for 11 consecutive weeks, hitting a new low in five years, which also shows the strong growth of demand. 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.
