Event: on March 31 local time, the Biden administration announced that the United States would release 1 million barrels of strategic oil reserves every day and 180 million barrels of oil in the next six months. This is the largest release since the United States established the oil reserve plan in 1974. On April 1 local time, the International Energy Agency (IEA) announced that the 31 member states of the organization reached an agreement on the same day and will release crude oil emergency reserves to the market again after March. Since the United States announced the release of strategic reserves, the oil price fluctuated slightly, and Brent spot price fell from $110.30/barrel on March 31 to $108.89/barrel on April 4; The price of WTI futures rose from US $100.28/barrel to US $103.28/barrel.
Comments:
The United States led the release of strategic crude oil reserves to alleviate market supply concerns and curb the rise of oil prices: international oil prices have continued to recover since the low point in April 2020. After entering 2022, the conflict between Russia and Ukraine led to the continuous sharp rise of international crude oil prices, which once exceeded US $137 / barrel on March 8, the highest oil price record since 2010. Based on the expectation of sanctions imposed by the international community on Russia, Russia’s crude oil exports may be reduced by about 3 million barrels / day. In its steo in March, the EIA raised the average spot price forecast of Brent crude oil in 2022 by more than US $22 per barrel to US $105.22 per barrel. The large-scale release of strategic oil reserves by the United States is expected to make up for the gap brought by Russia’s crude oil supply to a certain extent in the short term, alleviate market concerns about the supply side, and induce a short-term correction in oil prices.
The scale of this inventory disposal is unprecedented, and the US SPR inventory “bottomed out”. The United States: the United States will release a total of 180 million barrels of strategic oil reserves within six months, which is the largest release of reserves since the establishment of the strategic oil reserve (SPR) system in 1974. At the same time, this is also the third time since November 2021 that the United States has released strategic oil reserves. In November 2021 and early March 2022, the U.S. government released 50 million barrels and 30 million barrels of SPR respectively. As of March 25 this year, the SPR reserve of the United States was 568.3 million barrels. After the release of 180 million barrels of crude oil, the remaining SPR of the United States was only 388.3 million barrels, close to the minimum SPR reserve specified by the IEA (according to the calculation that IEA Member States must hold 90 days of net import reserves, the SPR of the United States must hold 315 million barrels). International Energy Agency (IEA): This is the second time this year and the fifth time in history that IEA has released emergency reserves of crude oil. IEA member states have a total of 1.5 billion barrels of crude oil emergency reserves, and announced the emergency release of stocks in 1991, 2005, 2011 and March 2022 respectively. In the emergency stockpile disposal in early March this year, IEA Member States released a total of 62.7 million barrels of oil reserves, accounting for about 4% of their total reserves, of which the United States accounted for nearly half and European countries accounted for about 1 / 4.
The long-term oil supply is tight, and the oil price has potential upward space. From the perspective of the futures market, Russia’s oil price is significantly subsidized: affected by the conflict between Russia and Ukraine and international sanctions, the export of Russian crude oil up to 3 million barrels / day is restricted, and the discount range of Russian ural crude oil compared with the spot benchmark Brent crude oil has reached the largest in history. On April 4, the price of Urals crude oil was 33.06 US dollars / barrel lower than the spot price of Brent crude oil in the spot market. Under this price, it still did not attract buyers to accept the offer. The progress of shale oil production in the United States is slow: the number of oil rigs in the United States increased by two to 533 this week; The number of natural gas drilling rigs increased by 1 to 138. Since 2022, the international oil price has soared, but the number of active drilling rigs in the United States has increased slowly. Without sufficient funds to support the excavation of new wells, American shale oil enterprises have given priority to increasing the completion operation of inventory wells (Duc). According to EIA statistics, the number of duc in the United States has continued to decline since August 2020. By February 2022, the number of Duc in the United States has decreased to 4372, a decrease of nearly 50%. The continuous decline of Duc may lead to limited growth of US crude oil in 2022. Recent decline and long-term rise in oil prices: the release of oil reserves may alleviate the oil supply crisis caused by recent Russian sanctions and smooth short-term oil price fluctuations. However, after this round of dumping, the US reserve “bottomed out”, which is only 70 million barrels of space compared with the minimum requirements of the IEA; The gap between international oil supply and demand still exists, adding that the global crude oil inventory is at a low level. The market is expected that the United States and other countries will still make up the SPR demand in the later stage. Therefore, the crude oil futures price has decreased in recent months, but the forward price has increased compared with the previous month.
Investment suggestion: the rise of oil price drives the performance of oil enterprises, the recovery of upstream capital expenditure and the increase and expansion of related chemical prices. It is suggested to pay attention to enterprises such as Petrochina Company Limited(601857) , CNOOC, Zhongman Petroleum And Natural Gas Group Corp.Ltd(603619) , China Oilfield Services Limited(601808) , Nanjing Develop Advanced Manufacturing Co.Ltd(688377) , Ningxia Baofeng Energy Group Co.Ltd(600989) , Zhejiang Satellite Petrochemical Co.Ltd(002648) .
Risk tip: the implementation of the storage disposal plan is slower than expected, the global geopolitical conflict continues, and the repeated global epidemic leads to lower than expected demand.
