The strong international oil price trend is "making a comeback".
On Thursday (June 9), international oil prices fell across the board. The U.S. oil July contract fell 0.58% to US$121.40/barrel, and the Brent oil August contract fell 0.54% to US$122.91/barrel.
However, just the day before (8th), the July contract of U.S. oil closed at US$122.11/barrel, and the August contract of Brent oil closed at US$123.58/barrel. Both set new highs since March 8 this year. horizontal . The trend of
does not seem surprising. Everbright Securities already stated in its research report at the end of May that the era of high oil prices for is coming for .
1. Institutions are bullish: Oil prices may hit US$150/barrel
Why did crude oil prices hit a new high again?
Sichuan Cai Securities analysis said that due to the disturbance of geopolitical conflicts, the EU reached an agreement on embargoing some Russian crude oil, and the tightening of crude oil supply caused market concerns.
Data from the Russian Federal Customs Service show that Russia is the world’s second largest exporter of crude oil. In 2021, Russia's crude oil exports reached 230 million tons, of which approximately 29% was exported to Europe. It can be seen from the data that the EU region is highly dependent on Russian crude oil. Recently, the EU reached an agreement on embargoing the import of Russian crude oil, stating that it will immediately ban the import of 75% of Russian oil. The tightening of crude oil supply has once again triggered market concerns , supporting the sharp rise in international oil prices in recent days.
Regarding the future trend of oil prices, the U.S. Energy Information Administration (EIA) predicts that the average price of Brent crude oil will reach US$108/barrel in the second half of 2022, and the average price will drop to US$97/barrel in 2023. EIA stated that the sanctions and related actions taken by all walks of life against Russia will directly affect the production of Russian oil and its sales in the global market.
It is worth mentioning that institutions such as Citibank, JPMorgan Chase, and Goldman Sachs have also successively raised their expectations for international oil prices. Oil trader Tiafigura pointed out that global oil supply has been tense due to insufficient investment for many years. Export sanctions against Russia have exacerbated this tension. Oil prices may rise to $150 in the next few months. /bucket or even higher .
2. Calculation: How big is the impact on various industries?
Guosen Securities found through calculations that when oil prices rise, the midstream smelting level is directly affected due to the high proportion of "primary consumption", while the downstream industries are affected indirectly by derivatives..
Crude oil smelting is transmitted to the mid-stream and downstream, mainly invested in transportation, chemical industry sector, and other sectors. The final downstream demand mainly comes from the two major sectors of transportation, construction and installation, and materials.
Midstream smelting accounts for a high proportion of "primary consumption" of crude oil. For example, refining reaches 77%, and oil and gas reaches 100%. It will be directly affected by oil price fluctuations, and then gradually transmitted to the downstream crude oil consumption sector.
In contrast, the impact of crude oil prices on the petrochemical industry is mainly transmitted internally through intermediate links.
It is worth noting that crude oil prices began to rise in the year and the following year, which had different dimensions of impact on the profit growth forecasts of various industries .
In the year when crude oil prices rose, the adjusted profit growth expectations in the annual reports of the computer, light industry, pharmaceutical and biological, electrical equipment, real estate, textile and apparel industries in the mid- and downstream sectors were often underestimated compared with the actual growth rate;
on The profits in the midstream of mining, steel, non-ferrous metals, chemical industry, and machinery and equipment; in the downstream of construction and building materials, automobiles, communications, electronics, national defense, and food and beverages, it is easy to be overestimated.
According to the experience of the previous three rounds of oil price rise cycles, the second half of the rise in oil prices was in the second half of the rise in crude oil prices. Historical experience shows that the profit growth rate of the mining industry is even higher than that of the previous year, but its real profit growth rate will be weakened on average, which can easily lead to overestimation of profits.
3. Review: How will A-shares go?
Industrial Securities found through review that periods of sharp rises in crude oil prices are often accompanied by global economic recovery and loose monetary and fiscal policies in major economies, and stock markets tend to perform better. In the past 30 years, international oil prices have experienced six sharp upward phases, with the increases mostly in the range of 200%-300%..Judging from historical experience, crude oil prices fluctuate greatly. At the same time, factors such as tightening supply and loose liquidity often cause oil prices to rise beyond expectations.
(Picture/Industrial Securities)
The main reasons for the surge in crude oil prices include global economic recovery driving upward demand, OPEC production cuts leading to a tightening of the supply side, and geopolitics in the Middle East affecting crude oil production .
Industrial Securities reviewed the six rounds of oil price surges that have occurred in the past 30 years and found that A-shares tend to follow the rise in oil prices in the early stages of rising oil prices. When oil prices rise into the middle and late stages, the stock market often peaks before oil prices.
4. What investment opportunities are worthy of attention?
Everbright Securities: In 2022, when the world enters a historic moment of high oil prices again, it is recommended to pay attention to:
1) upstream and oil services sectors that benefit from rising oil and gas prices ;
2) Under high oil prices The coal chemical sector and the light hydrocarbon cracking sector , which have certain cost advantages;
3), the large refining sector still has high growth potential in the medium to long term.
Donghai Securities: Oil prices remain high, which is good for targets with oil and gas resources. It is expected that global upstream oil and gas projects will maintain rapid growth in 2022, and capital expenditures will rebound. It is good for the production capacity orders and performance release of the oilfield services industry. Among them, the focus is on:
1) Related targets with upstream oil and gas assets and liquefied natural gas (LNG) facilities;
2) Domestic offshore oil services, which have great potential to increase reserves and production;
3) US shale equipment suppliers;
4) Domestic liquefaction equipment Related subjects of natural gas (LNG) receiving stations.
(Report source: Guosen Securities, Industrial Securities, Sichuan Securities, Everbright Securities, Donghai Securities; the information in this article does not constitute any investment advice. The published content comes from licensed securities institutions and does not represent the platform’s views. Investors are requested to make independent judgments and decisions. )
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