In fact, Buffett has been buying Occupy Oil's equity on a large scale recently. In fact, the biggest optimistic point is that it is optimistic that it will likely have a stable performance period of up to 10 years in the future. For example, if it currently holds up to 26% of the shares and expects to hold up to 50%, it has been buying for one year in a row and will continue to buy in the future. This buying cycle will definitely last for many years, and there will be a continuous period and a selling period in the future. In this case, if you are not optimistic about the oil cycle, there will definitely be no chance, so I believe that the oil cycle will be very long.
1. USD index surge is still the main reason for the recent decline in international oil prices
Most of the time in history, the USD index and international oil prices were negatively correlated, but since May last year, this historical strategy has changed and has become a synchronous relationship. From May 2021 to May 2022, for a year, the USD index has actually been synchronized with international oil prices, which is a time range worth studying. During this period, due to insufficient production capacity, international disputes and other factors, international oil prices continued to soar, and it would be difficult to fall after the rise. In the past four months, international oil prices and the US dollar index have shown a standard negative correlation. This is essentially because in the past four months, the Federal Reserve has raised interest rates on , which has curbed global demand, and thus the demand for crude oil has dropped a lot. However, the production capacity that has emerged cannot be closed immediately. After all, closing the oil well and restarting it will cost a lot. Therefore, if the Fed continues to raise interest rates in the future, global demand will continue to curb, and international oil prices will continue to fall.
2. Faced with the predictable decline in demand, OPEC production cuts
Global supply expected to be slightly lower than global demand, and the increase in production mainly depends on North America and Latin America. OPEC's September monthly report predicts that global crude oil demand will be 100.03 million barrels per day in 2022, with an expected average daily demand rising by 3.2% year-on-year compared with 2021, similar to the economic growth rate. If OPEC can keep crude oil supply lower than global demand, then international oil prices will remain relatively high for a long time. In the face of the Federal Reserve's forced interest rate hike, OPEC can only deal with it by reducing production.
Organization of Petroleum Exporting Countries (OPEC ) and non-OPEC oil-producing countries held the 32nd ministerial meeting on video on the 5th, deciding to cut production slightly in October, reducing the monthly output for the month by an average of 100,000 barrels per day. This is the first time the organization has cut its monthly output since August 2021. At present, the decline rate of international oil prices has exceeded OPEC's imagination, so OPEC is also stepping up production cuts to cope with the declining international demand.
3. Several analysis of oil prices will remain high in the future
Crude oil prices are expected to fluctuate at a high of 80-100 US dollars in the second half of the year, and upstream oil and gas extraction companies and oil service equipment companies will continue to benefit. Considering that crude oil has both commodity and financial attributes, under the current global supply and demand pattern, the influence of geopolitical has not yet subsided, and oil and gas prices will still be in a high fluctuation range in the future, mainly based on:
1) Inventory: The overall crude oil inventory level has dropped sharply compared with previous years, and there is still a demand for replenishment in the future;
2) Demand: Despite the risk of recession expectations, the current global overall demand remains at a high level and is growing moderately. Demand growth in some regions such as China-India and Southeast Asia is relatively fast;
3) Supply: The future production increase expectations cannot be quickly fulfilled, and the overall capital expenditure progress of oil and gas companies has increased, but it is not radical, and the production capacity release progress is slow. Based on the above analysis, we judge that oil prices in the fourth quarter may fluctuate around the high level of 80-100 US dollars per barrel against the strong background of the US dollar index, and there is even a possibility of rising.
Huafu Securities research is actually quite credible, so it is likely that international oil prices will remain above US$80 for a long time in the future.
4. High oil prices are good for oil-producing companies
If the international oil price remains above US$80 for a long time in the future, the benefits of oil-producing companies will be very good. Currently, the larger oil-producing companies in China include China National Offshore Oil Corporation , China Petroleum , etc.At present, the PE of China National Petroleum and China National Offshore Oil Corporation has been lowered to 5 times the price-to-earnings ratio. Although crude oil is a cyclical industry, many times once it remains high, there will always be a process of maintaining a high level for a long time. Therefore, you can pay attention to China National Offshore Oil Corporation and China National Petroleum, which have extremely low PE.
