Demand support superimposed on geopolitical conflicts and hidden worries, and the oil price fluctuated violently
The conflict between Russia and Ukraine continued this week. The strong demand for refined oil in the United States supported the demand for crude oil. There are still hidden worries about oil sanctions against Russia in Europe and the United States. Under the balance of supply and demand, the international oil price fluctuated violently. As of May 20, Brent and WTI crude oil futures prices closed at US $112.91/barrel and US $110.35/barrel respectively, and the US dollar index closed near 103.0.
The number of oil drilling rigs in the United States increased and the crude oil inventory decreased by 3.39 million barrels
This week, the number of active oil drilling in the United States increased by 13 to 576, and the total number of oil and gas drilling rigs increased by 14 to 728. U.S. crude oil inventory was 420.8 million barrels, down 3.39 million barrels from the previous week; The total gasoline inventory in the United States was 202.2 million barrels, a decrease of 4.78 million barrels compared with the previous week; Distillate oil inventory was 105.3 million barrels, a decrease of 1.24 million barrels compared with the previous week.
OPEC output increased in April 2022, increasing by 153000 barrels / day to 28.65 million barrels / day compared with the previous month
OPEC output increased in April 2022, with Saudi Arabia’s output of 10.346 million barrels / day, an increase of 127000 barrels / day over the previous month; Iraq’s output was 4.405 million barrels per day, an increase of 103000 barrels per day over the previous month; Iran’s output was 2.564 million barrels per day, an increase of 16000 barrels per day over the previous month; Venezuela’s output was 707000 barrels per day, an increase of 14000 barrels per day over the previous month; Libya’s output was 913000 barrels per day, down 161000 barrels per day from the previous month.
This week, the prices of butadiene and pure benzene rose, the prices of naphtha, ethylene and propylene fell, and the price difference of naphtha, PDH and MTO fell.
The arrival of summer travel peak supports the demand for crude oil, and the oil price range fluctuates
The conflict between Russia and Ukraine continued this week. On the demand side, with the arrival of the peak travel in summer, the U.S. road and air travel will increase, and the consumer demand restrained by the epidemic will rebound. The demand for refined oil in the United States is strong. On Wednesday, the national average retail gasoline price in the United States exceeded $4.50 per gallon for the first time, up about 50 cents from a month ago and a sharp increase from $3.04 per gallon in the same period last year; The rising demand has driven the operating rate of US refineries to remain high, which strongly supports the demand for crude oil. On the supply side, according to IEA data, Russia’s crude oil production decreased by 9% in April, and the supply lost due to sanctions was 900000 barrels / day. However, the oil export volume increased by about 620000 barrels / day compared with March, reaching 8.1 million barrels / day. The EU is still the largest market for Russian oil, and 43% of Russia’s oil exports went to the EU in April; From May 1 to 15 this year, the average daily output of oil and condensate gas in Russia was 1.398 million tons, an increase of 1.7% compared with the first half of April; On the other hand, OPEC believes that due to insufficient refining capacity, the increase in production cannot reduce the price of refined oil, and OPEC + will continue to increase production by 432000 barrels per day per month as planned. In terms of geopolitics, following Europe’s difficulty in reaching an agreement on the embargo on Russian crude oil, the United States proposed to European countries to impose tariffs on Russian crude oil at this week’s G7 financial conference as an alternative to the embargo on Russian oil; The United States also plans to lift the ban on Venezuelan crude oil to deal with the supply impact caused by the withdrawal of Russian oil. 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.
