International oil prices are expected to break through to a record high of $120 as supply tightens

After the ups and downs in March this year, the international oil price has strengthened again recently, returning to the high point of 120 US dollars per barrel.

The tense situation on the global crude oil supply side has become the main reason for stimulating the price increase in this round, and it also supports many domestic and foreign institutions to sing more oil prices again.

In the context of the global energy inflation, my country's series of policies to ensure supply and stabilize prices have shown results. Analysts believe that international oil prices may continue to soar, or even refresh historical highs. However, under the background of the overall stabilization of energy prices in my country, the international competitiveness of downstream enterprises has been enhanced.

Tighter supply pushes up oil prices

On June 8, WTI July crude oil futures closed up $2.7, or 2.26%, at $122.11 per barrel, while Brent August crude oil futures closed up $3.01, or 2.5%, at $123.58 per barrel, both of which were refreshed. The highest level since March 8 this year.

Stimulated by international geopolitical factors, crude oil prices once approached historical highs, and then fell below $100 per barrel in mid-March.

The strong international oil price has made a comeback, and the futures markets of various countries have followed up and responded.

On June 9, the main crude oil contract 2207 in the domestic futures market once rose to 783.4 yuan/barrel, breaking through the previous high of 772 yuan/barrel on March 9, refreshing the historical extreme value of the contract. As of the close in the afternoon of the same day, the 2207 contract rose 2.26% to close at 770.1 yuan per barrel.

According to the Japan Broadcasting Association (NHK), affected by the surge in the international crude oil market price, on June 9, local time, the price of the Middle East crude oil futures index on the Tokyo Commodity Exchange once rose to more than 89,000 yen per thousand liters, a record high of 11 in 13 years. highest value in a month.

"The underlying logic of international oil price fluctuations is essentially driven by the energy capital expenditure cycle, which is the same as the coal production cycle we proposed last year." Zuo Qianming, assistant general manager of the R&D Center of Cinda Securities and chief analyst of energy mining, said. A reporter from Securities Times e company said that in the process of the sharp rise in international oil prices in the early stage, the conflict between Russia and Ukraine was only a marginal driver, not the essential reason. Aside from the short-term impact of geopolitical factors leading to the ups and downs of oil prices, in the medium and long term, international oil prices are also expected to enter an upward cycle.

He said that in recent years, global oil and gas capital expenditure has continued to slump, new oil and gas production capacity has declined, and the recoverable resources and production capacity of existing oil and gas fields are gradually declining. Against the background of insufficient energy capacity increment, the global economy is still out of the post-pandemic recovery market, resulting in a large supply gap, leading to a surge in energy prices.

"Commodities can't easily say the top in an upward cycle. The top is often the result of marginal transactions, which does not necessarily represent the mainstream market, but it is necessary to grasp the trend. At present, the market demand is still rising, and the supply is close to the limit of capacity supply. International crude oil is expected to maintain an upward trend. We still believe that this round of energy inflation is a global energy inflation, and this round of international oil prices is also expected to hit a record high.” Zuo Qianming said that recently, the Secretary-General of OPEC has also publicly stated that most of the Member countries have reached their limits in terms of oil production. On the one hand, the growth of production capacity has entered a bottleneck period, and on the other hand, the economy and society are still developing, and the gap between supply and demand will continue to expand, resulting in a further increase in international crude oil prices.

Many analysts in the interview believed that tighter supply was the main reason for the recent rise in oil prices.

"The current global economy and energy demand are relatively stable. European and American countries have entered the peak oil consumption period in summer. At the same time, the domestic epidemic prevention and control situation is improving, and energy demand is also facing growth. At the same time, there are many factors that are expected to be tight on the international crude oil supply side. On the one hand, , against the backdrop of the turbulent international geopolitical situation, crude oil exports encountered resistance. On the other hand, the OPEC+ policy of steadily increasing production has accelerated again on the basis of the previous 400,000 barrels per month, but due to insufficient production capacity, the actual output and target output There are many gaps." Zhuo Chuang analyst Sang Xiao said in an interview that the United States, as a big consumer country, has not seen significant growth in oil production. The data shows that although the peak demand in the summer season has entered, the recent weekly data on US oil production has remained flat, making it difficult to continue accumulating stocks.

Data from the U.S. Energy Information Administration on Wednesday (June 8) showed that although U.S. commercial crude oil inventories increased last week, total motor gasoline inventories fell by 800,000 barrels, indicating that U.S. gasoline demand is still rising. The current international crude oil market is in a state of tight balance, boosting oil prices.

Oil price volatility creates a chain reaction

Against the backdrop of bullish oil prices, Saudi Aramco said on June 5 that it would raise the official selling price (OSP) of its flagship Arabian Light crude oil to Asia in July to an average premium of $6.50 to the average price of benchmark crude in Oman and Dubai, higher than the June price. $4.40.

"my country is the largest importer of crude oil. The rising cost of crude oil will inevitably put pressure on the costs of downstream chemical companies, and imported inflation is obvious." Said Xue Jinlei, an analyst at the business club.

According to data from Jinlianchuang, most domestic chemical products rose sharply after the Dragon Boat Festival, driven by the surge in international crude oil prices. On June 8, the domestic spot market closed, and 33 of the 129 kinds of chemicals monitored rose, with an increase rate of 25.58%.

Compared with the petrochemical industry, the price fluctuations of refined oil products are closer to people's livelihood and attract more market attention.

According to media reports, the average oil price in at least 13 states in the United States has exceeded $5 per gallon. JPMorgan Chase previously predicted that the average U.S. gasoline price could rise above $6 this summer.

On June 14, my country will also usher in a new round of refined oil price adjustment window. Some institutions predict that the price of gasoline per liter of No. 95 in China will enter the era of 10 yuan.

With the continuous rise of international oil prices, oil stocks collectively strengthened in intraday trading on June 9.

The Wind Oil and Gas Index surged 2.22% on the same day, with Guangju Energy and Taishan Oil among the individual stocks trading at their daily limit. On the same day, the "three barrels of oil" of PetroChina, CNOOC and Sinopec also all rose to the red. During the intraday, CNOOC's share price exceeded 20 yuan per share, a record high, and its market value exceeded 950 billion yuan.

At the same time, individual stocks in the transportation industry collectively declined due to the expectation of cost pressure. The Wind shipping index fell 4.85% on the day, and the airline index also closed down 1.95%. Among individual stocks, Eternal Asia fell by more than 9%, Jiuchang Logistics fell by more than 8%, and COSCO Shipping Energy fell by more than 7%.

"Under the background of the global energy inflation, my country's coal prices and oil prices have risen to a certain extent recently, which inevitably puts certain cost pressures on downstream enterprises. However, compared with the international market, domestic supply and stable prices have achieved better results, and related downstream industries are still It has a strong competitive advantage." Zuo Qianming believes that under my country's resource endowment, coal and coal chemical industry still play the role of the mainstay, and only some chemical products are closely related to oil prices. Under a series of domestic policies to ensure supply and stabilize prices, coal prices are more stable compared to the global market, with obvious comparative advantages.

"According to the latest data released by the General Administration of Customs of China on June 9, in dollar terms, my country's exports in May reached 308.25 billion US dollars, an increase of 16.9%, much higher than the previous expectation of 8%, and the export growth rate in April was only 3.9%. This shows that in the context of this round of global energy inflation, the international competitiveness of China's manufacturing industry, including the chemical industry, is increasing." He said.

Oil price rally will continue

Against the backdrop of the strong upward trend in international oil prices, a number of institutions at home and abroad have recently raised their forecasts for international oil prices, even as high as $150 per barrel this year.

Jeremy Weir, chief executive of Trafigura Group, the world's third-largest independent oil trading company, said on June 7 that oil prices will continue to soar in the coming months and may reach $150 a barrel or more by the end of the year.

Citibank recently raised its forecast for Brent oil prices. It currently expects the price of Brent crude oil to be $113 per barrel in the second quarter of this year, which is higher than the previous forecast of $99 per barrel. The price forecasts for the third and fourth quarters were also raised to per barrel. Barrels $99 and $85. The crude oil forecast for 2023 was raised to $75 a barrel.

Sang Xiao also believes that it is difficult to reverse the trend of international oil prices in the short term. If the market continues to ferment good, crude oil prices will continue to rise, do not rule out the possibility of breaking the previous high.

However, she reminded that the current oil price is relatively high. While paying attention to the good news, it is also necessary to pay attention to the suppression of oil prices by European and American countries' propaganda to increase production. At the same time, the Federal Reserve has continued to raise interest rates frequently, and subsequent interest rate hikes may also trigger financial market turmoil and increase the suppression effect on the commodity market, including the oil market.

Article source: Securities Times