China's energy prices have stabilized as a whole

After the ups and downs in March this year, international oil prices have strengthened again in recent days, returning to a high of $120 per barrel.The tight situation on the global crude oil supply side has become the main reason for stimulating this round of price increases, and it has also supported many domestic and foreign institutions to sing more oil prices again.

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

Tighter supply has boosted oil prices

On June 8, WTI crude oil futures for July closed up $2.7, or 2.26%, at $122.11 a barrel, and Brent crude oil futures for August delivery closed up $3.01, or 2.5%, at $123.58 a barrel, both of which refreshed their highest levels since March 8 this year.Previously, stimulated by international geopolitical factors, crude oil prices once approached record highs, and then fell below $100 per barrel in mid-March.The strong international oil price market 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 and refreshing the historical extreme value of the contract. As of the close of the afternoon of the same day, the 2207 contract rose 2.26% to close at 770.1 yuan / barrel.According to the Japan Broadcasting Association (NHK), affected by the soaring prices in the international crude oil market, on June 9, local time, the index price of Middle East crude oil futures on the Tokyo Commodity Exchange once rose to more than 89,000 yen per thousand liters, hitting the highest value in 13 years and 11 months."The underlying logic of international oil price fluctuations is essentially driven by the energy capital expenditure cycle, which is the same reason as the coal production capacity cycle we proposed last year." Zuo Qianming, assistant general manager of Cinda Securities R&D Center and chief analyst of energy exploitation, told the reporter of Securities Times E Company that in the process of the sharp rise in international oil prices in the early stage, geopolitical conflicts were only marginal promoters, not essential reasons. Aside from the short-term impact of geopolitical factors leading to the sharp fluctuations in 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 be sluggish, new oil and gas production capacity has declined, and the recoverable resources and production capacity of existing oil and gas fields are also gradually declining. Against the backdrop of insufficient energy capacity increment, the global economy is still out of the post-epidemic recovery market, which has brought a large supply gap, which has led to a surge in energy prices.

"Commodities are hard to top in an upcycle. The top is often the result of marginal trading and does not necessarily represent the mainstream market, but it is important to grasp the trend. At present, the market demand is still rising, and the supply is close to the limit of capacity supply, and the 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 the OPEC Secretary-General has also publicly stated that most member countries have reached the limit of oil production. On the one hand, the growth of production capacity has entered a bottleneck period, on the other hand, the economy and society are still developing, and the gap between supply and demand will continue to expand, resulting in further higher international crude oil prices.

In the interview, analysts mostly believe that the tightening supply is 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 period of oil consumption in summer, and 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 on the international crude oil supply side that are expected to be tight. On the one hand, against the backdrop of continued international geopolitical turmoil, crude oil exports have encountered resistance. On the other hand, OPEC+'s steady production increase policy has accelerated again on the previous 400,000 barrels per month, but there are many gaps between actual output and target output due to insufficient production capacity. Zhuochuang analyst Sang Xiao said in an interview that the United States, as a major consumer, has not seen significant growth in oil production. The data shows that although the demand peak has entered the summer season, the recent weekly data on U.S. oil production has remained flat, and it is difficult to continue to accumulate inventory.

U.S. commercial crude oil inventories rose last week, but total auto gasoline inventories fell by 800,000 barrels, showing that U.S. gasoline demand is still rising, according to data from the U.S. Energy Information Administration on Wednesday. At present, the international crude oil market is in a tight balance, which boosts the upward trend of oil prices.

Fluctuations in oil prices have a knock-on effect

Aramco said on June 5 that it would raise the official selling price (OSP) premium of its July flagship Arabian Light crude to Asia to $6.5 from the average price of its Oman and Dubai benchmarks, up from $4.4 in June."China is the largest importer of crude oil. The rising cost of crude oil will inevitably put pressure on the cost of downstream chemical enterprises, and imported inflation is obvious. Xue Jinlei, an analyst at the business club, said.Jinlianchuang data shows that driven by the sharp rise in international crude oil prices, most domestic chemicals rose sharply after the Dragon Boat Festival. At the close of domestic spot trading on June 8, 33 of the 129 chemicals monitored rose, with an increase rate of 25.58%.Compared with the petrochemical industry, the fluctuation of refined oil prices is close to people's livelihood and attracts 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, China will also usher in a new round of refined oil price adjustment window. Some institutions predict that the domestic price of 95 gasoline per liter will enter the era of 10 yuan.With the continuous rise in international oil prices, intraday oil stocks collectively strengthened on June 9.On the same day, the Wind Oil and Gas Index rose 2.22%, and the daily limit of Guangju Energy and Taishan Petroleum was among the individual stocks. On the same day, PetroChina, CNOOC, and Sinopec "three barrels of oil" were also red, and the share price of CNOOC exceeded 20 yuan per share, hitting a record high, with a market value of more than 950 billion yuan.

At the same time, affected by the expectation of cost pressure, individual stocks in the transportation industry collectively declined. The Wind Marine Index fell 4.85% on the day, and the Aviation Index also closed down 1.95%. Among the individual stocks, Eternal Asia fell more than 9%, Changchang Logistics fell more than 8%, and COSCO Shipping Energy fell more than 7%."In the context of global energy inflation, China's coal prices and oil prices have risen to a certain extent in recent times, which will inevitably put downstream industry enterprises under certain cost pressure, but compared with the international market, the domestic supply and price stabilization effect is better, and the relevant downstream still has a strong competitive advantage." Zuo Qianming believes that under China's resource endowment, coal and coal chemical industry still play a mainstay role, and only some chemicals and oil prices are more related. Under the domestic series of policies to ensure supply and stabilize prices, coal prices are more stable than those of the global market, and the comparative advantage is obvious."According to the latest data released by the General Administration of Customs of China on June 9, in US dollar terms, China's exports in May were 308.25 billion US dollars, an increase of 16.9%, much higher than the previous expectation of 8%, after 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.

The rally in oil prices will continue

Against the backdrop of strong international oil prices, many institutions at home and abroad have recently raised their international oil price expectations, and even as high as $150 per barrel during the year.Jeremy Weir, CEO of Trafigura, 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 could reach $150 a barrel or more by the end of the year.Citibank recently raised its Brent oil price forecast, which now expects Brent crude to be $113 per barrel in the second quarter of this year, up from its previous forecast of $99 per barrel, and its price forecast for the third and fourth quarters has also been raised to $99 and $85 per barrel, respectively. The crude oil forecast for 2023 has been revised upwards to $75 per 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, crude oil prices will continue to rise, and the possibility of breaking through the previous high cannot be ruled out.However, she reminded that the current oil price is in a relatively high position, and while paying attention to the good news, it is also necessary to pay attention to the suppressive effect of European and American countries on oil prices. At the same time, the Fed continues to raise interest rates frequently, and subsequent interest rate hikes may also trigger turmoil in financial markets, increasing the pressure on commodity markets, including the oil market.

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