Under the influence of geopolitics, both supply and demand fell, and oil prices fluctuated and fell
The conflict between Russia and Ukraine continued this week. The IMF lowered its global economic growth forecast for 22 years. The EU may sanction Russian crude oil, which continued the market’s concern about supply. Under the balance of supply and demand, the international oil price fluctuated and fell. As of April 22, Brent and WTI crude oil futures prices closed at US $106.65/barrel and US $102.07/barrel respectively, and the US dollar index closed near 101.1.
The number of oil drilling rigs in the United States increased and crude oil inventories decreased by 8.02 million barrels. This week, the number of active oil drilling rigs in the United States increased by 1 to 549, and the total number of oil and gas drilling rigs increased by 2 to 695. The US crude oil inventory was 413.7 million barrels, a decrease of 802 million barrels compared with the previous week; The total gasoline inventory in the United States was 232.4 million barrels, a decrease of 760000 barrels over the previous week; Distillate oil inventory was 108.7 million barrels, down 2.66 million barrels from the previous week.
In March 2022, OPEC output increased by 57000 barrels / day to 28.557 million barrels / day compared with the previous month
OPEC output increased in March 2022, with Saudi Arabia’s output of 10.262 million barrels / day, an increase of 54000 barrels / day over the previous month; Iraq’s output was 4.309 million barrels per day, an increase of 11000 barrels per day over the previous month; Iran’s output was 2.546 million barrels per day, an increase of 7000 barrels per day over the previous month; Venezuela’s output was 697000 barrels per day, an increase of 8000 barrels per day over the previous month; Libya’s output was 1074000 barrels per day, down 37000 barrels per day from the previous month. This week, the prices of naphtha, propylene and pure benzene rose, the prices of ethylene and butadiene fell, and the price difference of naphtha, PDH and MTO fell.
CNOOC returned to A-Shares and continued to be optimistic about the upstream sector
This week, CNOOC was officially listed on the Shanghai Stock Exchange, and “three barrels of oil” gathered in a shares. CNOOC focused on the main business of oil and gas exploration and development, increased capital expenditure under the background of “increasing reserves and production”, and the output increased steadily. In 2021, the total oil and gas output reached 573 million barrels equivalent, a new high in seven years; High quality assets, cost reduction and efficiency increase, and continuously reduce the mining cost to $29.5/barrel; In the era of high oil prices, we continue to be optimistic about the upstream oil and gas exploration sector. CNOOC, as a scarce pure cursor of a shares, will fully benefit from the boom of the crude oil market. In terms of crude oil fundamentals, the conflict between Russia and Ukraine continued this week, and the demand side. This week, the IMF released the world economic outlook, which said that due to the direct impact of the war on Russia and Ukraine and the spillover impact on the world through bulk commodities, the predicted value of global economic growth in 2022 and 2023 was reduced to 3.6%, 0.8pct and 0.2pct respectively. The slowdown in global economic growth will slow down the recovery of crude oil demand. On the supply side, this week Libya announced the closure of its largest oil field with an output of 500000 barrels per day. Previously, the nearby oil field with an output of 65000 barrels per day was also suspended. Libya’s output may be reduced by 535000 barrels per day, exacerbating the tension on the supply side; Reuters reported that the European Union will fully ban Russian crude oil next week, which exacerbated the market’s concerns about the supply side. On the whole, the global crude oil demand is under pressure, but the supply side risk is intensified due to geographical conflicts, and the tight supply and demand pattern of the crude oil market will remain. 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, CNOOC, Sinopec, 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.
