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1. Supply and demand will continue to be tight throughout the year, and oil prices may run at a high level

1. International oil prices continue to rise, and the supply and demand pattern undergoes profound adjustments

(1) Review of the development of the global oil industry

The center of oil prices has risen significantly this year, with the average price exceeding US$100/barrel in the first half of the year. Since the emergence of the Omicron variant virus in December 2021, people's travel has been blocked, and demand has declined in the short term. International oil prices have experienced a major decline, and the price of Brent crude oil has dropped below US$70/barrel. As the influence of Omicron on the world gradually weakens, international oil prices will start to pick up in 2022. Since 2022, the geopolitical conflict between Russia and Ukraine has intensified, while OPEC+ has maintained its production plan, driving oil prices to continue to rise. In February, as Russia launched military operations, the Russo-Ukraine war broke out, pushing crude oil prices to break through $100/barrel for the first time since 14 years, and then continued to rise. From April to May, the conflict between Russia and Ukraine continued, and the European Union imposed sanctions on Russian crude oil, which affected the refinery capacity of nearly one million barrels per day in the United States. With the arrival of the summer travel peak, the conflict between the supply and demand of gasoline and crude oil in the United States has intensified, driving up gasoline prices. Since June, domestic production and travel have gradually resumed, but inflation in Europe and the United States has exceeded expectations, and the US Federal Reserve is expected to raise interest rates, and overseas economies have slowed down. At the same time, the conflict between Russia and Ukraine continued. The European Commission announced the sixth round of sanctions against Russia on June 3. It will stop buying Russian seaborne crude oil within 6 months, which accounts for two-thirds of the EU’s imports of Russian crude oil. Stop buying Russian oil products within 8 months. It is expected that by the end of 2022, the EU's oil imports from Russia will be reduced by 90%. Coupled with factors such as insufficient OPEC+ remaining production capacity, oil prices remain high and volatile. Since July, the market's panic about the economic outlook still exists, and the price of Brent crude oil has fallen back to around US$100/barrel.

Russia is an indispensable energy supplier for European countries. The EU embargo will affect nearly 3 million barrels per day of imports from Russia. According to OPEC data, Russia's crude oil production reached 9.62 million barrels per day, accounting for 14% of global production, making Russia the third largest oil producer in the world. In 2021, Russia’s oil export volume will be about 4.63 million barrels per day, the second largest export volume in the world, of which 53% will be exported to European countries dominated by Germany, the Netherlands and Poland, and exports to China and CIS countries will be 1.6 million barrels respectively /day and around 400,000 barrels/day, accounting for 27% and 6% respectively. In 2021, the output of crude oil/condensate in Europe will only be 3.6599 million barrels per day, and the import volume will reach 9.6 million barrels per day. In recent years, the import dependence has been above 75%. In terms of oil products, the structure of the European oil refining industry is highly dependent on the import of upstream crude oil, showing a structural shortage. In 2019, EU28 imports reached 50 million tons, of which 25.5 million tons came from Russia, accounting for 51%. After the Russian oil embargo, imports from resource pipelines in Germany and Poland will be reduced by about 500,000 barrels per day. The EU embargo will affect the import of crude oil from Russia by 1.71 million barrels per day, and the import of oil products by 1.27 million barrels per day, totaling nearly 3 million barrels /day.

The EU increased imports of crude oil and alternative sources of oil products. In order to make up for the overall decline in Russia's seaborne imports, the EU has increased crude oil imports from Africa, the Americas, and the Middle East, increasing by 390,000 barrels/day, 360,000 barrels/day, and 90,000 barrels/day in June compared with February; Increased imports of oil products from the Middle East and Asia, with an increase of 150,000 barrels per day and 140,000 barrels per day in June compared with February.

Russia's oil exports to embargoed countries fell by nearly half, and buyers from Asian countries offset the decline in crude oil to a certain extent. From the implementation of the embargo to June, the designed oil trade scale of the embargoed country’s oil embargo against Russia exceeded 4 million barrels per day, accounting for more than 70% of Russia’s total exports. Among them, the EU, the United States, and Japan respectively embargoed crude oil 1.99 million barrels per day, 198,000 barrels per day, 92,000 barrels per day, 1.35 million barrels per day, 368,000 barrels per day, and 135,000 barrels per day of embargoed oil products in the EU, the United States, and the United Kingdom. Compared with February, Russia's oil exports to embargoed countries have decreased by 2.42 million barrels per day, a drop of nearly 50%.

Sanctions put greater pressure on the export of Russian oil products, and production will be reduced in the future. Because of the overall surplus of refined oil in Asian countries and weak demand for oil product imports, it is difficult for Russia to find buyers for its refined oil exports. Russia is expected to gradually reduce oil and crude oil production. According to the IEA's June monthly report, Russia's oil and crude oil production will drop to 9.03 million barrels per day and 7.8 million barrels per day by the end of the year, a decrease of 2.37 million barrels per day and 2.25 million barrels per day compared with February. barrel/day.

(2) Analysis of international oil supply and demand

Supply side: In order to cope with the shortage of Russian oil supply in the world, the new supply mainly comes from three parts: the release of reserve stocks from countries such as the United States and IEA member countries in the short term; In the long run, upstream capital will need to increase investment in crude oil to support future oil exploration. Supply is tightening, global inventories are at a low level, and the Russian oil supply gap still exists in the short term. In April this year, the IEA announced that its 19 member states will release a total of 1.2 billion barrels of oil reserves in the next six months, of which the United States will release about 60.56 million barrels, and the remaining members will release nearly 60 million barrels. The IEA and the United States are expected to release a total of 2.4 billion barrels of oil reserves from May to October this year, equivalent to about 1.33 million barrels per day, accounting for 13% of global oil production. This move can alleviate the Russian crude oil supply gap to a certain extent, but the Russian oil supply gap still exists in the short term. At present, the U.S. Strategic Petroleum Reserve has dropped to the lowest level in five years, and the global oil inventory has dropped to about 7.6 billion barrels, which is also at a low level in recent years. According to the IEA's forecast, it is expected that OECD commercial oil inventories will still be significantly lower than the five-year average at the end of the year, and global crude oil inventories have rebounded, but are also lower than the five-year average.

The gap between OPEC+ crude oil production and the target has widened, and the increase may be lower than expected. OPEC has implemented production cuts since October 2021. In the past year, it has increased from 24.94 million barrels per day in 2020Q4 to 28.45 million barrels per day in 2022Q1, which is far behind the previous high of 32.08 million barrels per day in 2018Q4. In May, the output of 19 OPEC+ production reduction countries increased by only 130,000 barrels per day to 37.58 million barrels per day, which was 2.79 million barrels per day lower than the target. 10,000 barrels/day, 640,000 barrels/day, 310,000 barrels/day. OPEC+ decided to increase production in June, and increased production by 648,000 barrels per day from July to August. However, among the major oil-producing countries with large remaining production capacity: Iran and Russia are subject to sanctions; 100,000-200,000 barrels per day; Saudi Arabia is not willing to increase production. In terms of actual production, OPEC still lacks the motivation to increase production. The IEA expects OPEC+ effective surplus capacity to fall to 2.6 million barrels per day in the fourth quarter.

Non-OPEC+ production increases drive oil supply, and the United States is the source of growth momentum. In February 2022, U.S. shale oil production will be about 8.06 million barrels per day, accounting for about 65% of U.S. crude oil production, and its share of global oil production has risen rapidly from 1% in 2010 to 9.3%. The increase in U.S. crude oil production mainly depends on the depletion of shale well inventory (DUC). In May, the number of U.S. DUC wells decreased by 46 month-on-month, and the number continued to drop to a historical low of 4,249, while the number of new drilling rigs has not yet returned to a historical high. As of June 20, 2022, U.S. crude oil production is 12 million barrels per day, and it is expected that production will increase by 600,000 to 800,000 barrels per day this year, and production will exceed 13 million barrels per day in the middle of next year.

Demand side: The high oil price restrains the growth of demand in the peak season of oil, and it is difficult for demand to return to the level of 2019 in 2022. In terms of the global economy, due to the impact of the new crown epidemic in 2020, economic growth will slow down, driving oil demand down by 10%. In 2021, the epidemic will improve, the global economy will start to recover, and oil demand will rebound by 12%. However, the arrival of the Russia-Ukraine conflict has had an important impact on global trade and development. The reorganization of the global supply chain and the rise in trade costs have brought a huge impact on the world economy. In terms of oil prices, high oil prices will curb oil demand to a certain extent. In 2022, international oil prices will reach more than US$100/barrel, accounting for 4% of global GDP, which will drag down the recovery of the world economy and oil demand. At present, domestic gasoline and diesel prices in the United States have reached the highest historical record in five years, which is twice the average value in the past five years, exacerbating the inflation crisis. The initial value of the consumer price index (CPI) in the euro zone soared 8.1% year-on-year in May, reaching the highest level in history.

The fundamentals will continue to be tight throughout the year, and the market is highly uncertain. It is expected that oil prices will run at a high level. In the second half of the year, the increase in world oil supply exceeded the increase in demand. In the third and fourth quarters, the output of the world oil market was slightly larger than the demand. Considering the large-scale release of reserves by the United States and its allies, the third and fourth quarters increased supply by 850,000 barrels per day and 1.3 million barrels per day respectively. barrels/day, 450,000 barrels/day. In the second half of the year, global commercial oil inventories will pick up. Under the baseline scenario, the average price of Brent in the second, third and fourth quarters is expected to be US$109-113/barrel, US$111-115/barrel, and US$105-109/barrel respectively, and the average annual price will be US$105-110/barrel. It is expected that the Brent oil price will fluctuate within this year, with a lower limit of US$90/barrel and an extreme scenario of US$150/barrel. The geopolitical situation caused by the conflict between Russia and Ukraine will have a major impact on the trend of oil prices. After the EU imposed an oil embargo on Russia, under the pattern of strong supply and weak demand, due to the stronger expectation of tightening the supply side, this year’s oil price is at the benchmark level. Under the circumstances, it is unlikely that there will be a sharp correction, and the international oil price may continue to run at a high level throughout the year.

2. China's oil supply and demand

Domestic crude oil supply is dominated by conventional crude oil, and domestic crude oil production continues to rise. In 2021, China will rank sixth in the world with an average daily output of 4.09 million barrels, and the top five will be the United States, Russia, Saudi Arabia, Canada and Iraq. China implements the 7-year action plan (2019-2025), and it is estimated that this year's crude oil production will reach 200 million tons, returning to the situation before the sharp drop in oil prices. In 2021, China will produce 199 million tons of crude oil, a year-on-year increase of 2.4%, the highest domestic crude oil production since 2017. In 1980, my country's annual output of crude oil was 106 million tons. In 2015, the output reached a record 215 million tons. Since then, the output has declined for three consecutive years from 2016 to 2018. Until 2019, the three-year increase pattern was reopened. In 2021, the domestic output of the three major oil companies will account for as much as 90% of my country's output, of which PetroChina will achieve 753.4 million barrels of crude oil output, accounting for as much as 51%.

Over the past few years, offshore oil and gas, dominated by CNOOC, has been the main direction of China's production. China is rich in offshore resources, and the continuous growth of oil and natural gas production is largely due to some major breakthroughs in the exploration and development of offshore resources. In 2021, Bohai Oilfield, the largest offshore oilfield, will produce 30.132 million tons of crude oil, making it the largest crude oil production base in my country, with crude oil increments accounting for nearly 50% of the country's total. Offshore oil and gas exploration and development are characterized by high technology and high investment. In recent years, CNOOC has continuously carried out geological understanding innovation and scientific research in the fields of deep water, deep layers, high temperature and high pressure, and successively formed the "Key Technology and Industrial Application of High Temperature and High Pressure Drilling and Completion in the South China Sea" and "Deep Large-scale Integrated Condensate Gas Field in Bohai Bay Basin". Exploration theory technology and major discoveries" and other technical systems provide a strong guarantee for the increase of oil and gas reserves and production in my country. Among them, the "Key Technology and Industrial Application of High-temperature and High-pressure Drilling and Completion in the South China Sea" supported the discovery of five high-temperature and high-pressure gas fields, and built the first high-temperature and high-pressure gas field Dongfang 13-1 in my country's offshore and Dongfang 13-2, the largest offshore high-temperature and high-pressure gas field in China. At present, this set of technology has been fully applied at home and abroad. In 2021, compared with Europe, which is deeply affected by the new crown epidemic, the energy consumption situation in Asia is more optimistic. On the basis of resuming work and production, my country's oil companies continue to increase oil production, ensuring the steady growth of domestic oil production. Oil consumption mainly includes transportation fuels and raw materials for industrial production. As the epidemic eases and travel increases, the demand for oil by air and land transportation has increased significantly. In 2021, the total profit of the energy industry will be 1,430.68 billion yuan, a year-on-year increase of 96.5%, and the growth rate is 24.5 percentage points lower than that of the first three quarters; among them, the oil industry will realize a profit of 534.09 billion yuan, a year-on-year increase of 3.4 times. Petroleum in my country is mainly used in two fields of energy and chemical materials. In 2000, my country's total oil consumption was about 220 million tons, of which 190 million tons and 20 million tons were used in the fields of energy and chemical materials, accounting for 86% and 9% of the total oil consumption respectively. With the acceleration of industrialization and urbanization in our country, the fuel required by industrial and mining enterprises has increased, driving the rapid growth of fuel demand for oil.

In 2021, my country's crude oil imports will begin to decline. China has been the main driver of global oil demand in the past decade. Its import growth from 2015 to 2019 reached 44% of the global import growth rate. Even in 2020, which is deeply affected by the epidemic, China's crude oil import volume still increased compared with the previous year up 7.3%. With the rapid recovery of international oil prices and the restriction of appropriate domestic measures, China's crude oil imports will be about 513 million tons in 2021, a decrease of 6.38% year-on-year in 2020 and an increase of 1.45% year-on-year in 2019. From January to April 2022, China's crude oil imports will be 170 million tons, a decrease of 4.8% compared with the same period in 2021; from January to April 2022, China's crude oil imports will be 738.85 billion yuan, an increase of 46.9% compared with the same period in 2021 . Under the background of the "carbon emission reduction" policy, the management of domestic crude oil imports has become stricter, and the quota management of non-state-owned refineries has been significantly tightened. In 2022, my country's total non-state-owned crude oil import quota will be 243 million tons, which is the same as in 2021. In addition, the repeated domestic epidemic in the first half of the year affected oil consumption, which in turn dampened the enthusiasm of refineries to start.

2. Oil prices are significantly correlated with the profits of the petroleum and petrochemical industry, but not with the profits of the basic chemical industry

1. The relationship between oil price and annual profit of chemical industry

There is a strong correlation between the oil price and the annual profit of the petroleum and petrochemical industry, but no obvious correlation with the annual profit of the basic chemical industry. Carry out a correlation analysis between the oil price (annual average price of Brent crude oil) and the annual profit of each sub-industry of the chemical industry. After taking the absolute value of the obtained correlation coefficient, it is considered that 0-0.09 is no correlation, 0.1-0.3 is weak correlation, and 0.3 -0.5 is moderate correlation, 0.5-1.0 is strong correlation. According to the calculation results, there is a strong correlation between the oil price and the annual profit of the petroleum and petrochemical industry, and the correlation coefficient is as high as 0.809. Significant positive correlation, the correlation coefficients are 0.823, 0.835, respectively, since 2002, the petroleum and petrochemical tertiary sub-industry refining and chemical industry profits accounted for more than 97% of its secondary sub-industry refining and trading profits, refining and trading industry Profit accounts for more than 97% of the profits of the petroleum and petrochemical industry. Therefore, the significant positive correlation between the profits of the petroleum and petrochemical, refining and trading industries and oil prices is rooted in the relationship between the refining and chemical sub-sectors and oil prices.

There is a strong correlation. There is no obvious correlation between the oil price and the annual profit of the basic chemical industry, with a correlation coefficient of 0.052, but there is an obvious negative correlation with the annual profit of the three-tier sub-sector of the basic chemical industry, adhesives and tapes, synthetic resins, and other rubber products. The correlation coefficients are respectively are -0.582, -0.571, -0.554.

2. The relationship between oil prices and the quarterly profits of various chemical sub-sectors

There is a strong correlation between oil prices and the quarterly profits of petroleum and petrochemical industries, but not significant correlations with the quarterly profits of various sub-sectors of basic chemicals. Further explore the correlation between oil prices (quarterly average price of Brent crude oil) and the quarterly profits of various chemical sub-sectors. The correlation analysis results are not much different from the annual profit data analysis results. The correlation between oil prices and petroleum and petrochemical quarterly profits is significant. , the correlation coefficient is as high as 0.629, and there is no obvious correlation with the quarterly profit of basic chemical industry, and the correlation coefficient is 0.062. The quarterly profits of refining and trade, refining and chemical industry also show a high correlation with oil prices, the correlation coefficients are 0.632 and 0.638 respectively, and the quarterly profits of the three-tier sub-sectors of basic chemicals, adhesives, tapes and synthetic resins, all have a significant negative correlation with oil prices The correlation coefficients are -0.522 and -0.527 respectively. The absolute value of the correlation coefficient between the profits of most other sub-sectors and the oil price is less than 0.1, and the correlation is not significant.

3. Lag analysis of the correlation between oil prices and the quarterly profits of various chemical sub-sectors

There is a certain lag in the correlation between the quarterly profit of the chemical sub-sectors and the oil price, and the correlation between the petroleum and petrochemical industry and the oil price is the most significant in the third quarter of the lag. Considering that there is a time lag in the transmission of oil price fluctuations to downstream product prices, the quarterly profits of each sub-sector were moved backwards for the first quarter, the second quarter, the third quarter and the fourth quarter. price) correlation. The calculation results show that there is a certain hysteresis in the correlation between the quarterly profits of the chemical sub-sectors and the oil price. With the increase of the number of lag periods, the correlation coefficients of the three industries of petroleum and petrochemical, refining and trade, and refining and chemical industry first increase and then increase. Among them, the correlation coefficient is the largest when lagging three quarters, which are 0.671, 0.674, and 0.678 respectively, and there is a significant positive correlation, while the correlation between other sub-sectors and oil prices is not significant.

To sum up, we conducted a correlation analysis between the oil price (Brent crude oil price) and the profits of various chemical sub-sectors. There is a strong correlation between the annual profit of the petroleum and petrochemical industry, and a significant positive correlation with the annual profit of its sub-sector refining and trade (secondary sub-industry) and refining and chemical industry (third-level sub-industry); there is no obvious correlation with the annual profit of the basic chemical industry However, there is an obvious negative correlation with the annual profits of the three-tier sub-sectors of the basic chemical industry, adhesives and tapes, synthetic resins, and other rubber products. (2) Through the correlation analysis with the quarterly profits of various sub-sectors of the chemical industry, the results are generally consistent with the results of the annual profit analysis. There is a strong correlation between oil prices and the quarterly profits of petroleum and petrochemical industries. There is also a high correlation with petroleum prices; there is no obvious correlation with the quarterly profits of basic chemical industries, and the quarterly profits of the basic chemical industry's third-tier sub-sectors of adhesives and tapes and synthetic resins have a significant negative correlation with petroleum prices. (3) Considering that there is a time lag in the transmission of oil price fluctuations to downstream product prices, by moving the quarterly profits of the chemical sub-sectors back to the first quarter, the second quarter, the third quarter and the fourth quarter respectively, and then conducting a correlation analysis with oil prices, the results show that There is a certain lag in the correlation between the quarterly profits of the chemical sub-sectors and the oil price, among which the three industries of petroleum and petrochemical, refining and trade, and refining and chemical industry have the largest correlation coefficients with the oil price when the third quarter lags behind.

In summary, there is a clear correlation between oil prices and the profits of the petrochemical industry, especially in the refining and chemical sub-sectors, which have a significant correlation with oil prices. The main reason is that the petrochemical industry mostly uses oil as upstream raw materials, and fluctuations in oil prices will have an impact on product prices and profits. have a significant impact. There is no obvious correlation between the oil price and the profit of the basic chemical industry, and there is no obvious correlation between the oil price and the profit of the basic chemical industry. One of the reasons may be that many enterprises in my country's chemical industry use coal as raw material, and the fluctuation range of coal price is relatively large. It is less than the volatility of oil prices. It is recommended that you do not need to pay too much attention to the rise and fall of oil prices when investing in basic chemical targets. When the oil price rises, the global economic environment may be better, and the terminal demand will drive the demand for chemicals downstream of the industrial chain to increase, thereby increasing the profits of enterprises; when the oil price falls, despite the decline in raw material costs, the terminal demand may decrease, which will reduce the demand for chemicals. , leading to a decline in corporate profits. The discussion of this result is only a certain regular summary obtained through statistical analysis, and does not mean that there is a causal relationship between the rise and fall of oil prices and the increase or decrease of industry profits. There are many factors that affect the company's profits, such as the macroeconomic environment, policies, and business management. , industry competition, natural factors, etc.

3. The relationship between oil prices and the industry indexes of various chemical sub-sectors

There is a clear correlation between oil prices and the oil service engineering, oil and gas and refining engineering, and oil and petrochemical trade industry indexes of the petroleum and petrochemical sub-sectors, and there is a significant correlation with the basic chemical industry index. We conducted a correlation analysis between the industry index of each sub-sector of the chemical industry and the oil price (Brent crude oil price) trend, and the analysis results are slightly different from the industry profit analysis results. In terms of petroleum and petrochemical industry, there is a significant correlation between oil price and oil service engineering (secondary sub-industry), oil and gas and refining engineering (third-level sub-industry), oil and petrochemical trade (third-level sub-industry) industry index, and the correlation coefficient They are 0.514, 0.569, 0.633 respectively. In terms of basic chemical industry, there is a significant positive correlation between oil price and the second-level sub-sector of basic chemical industry, agrochemical products and non-metallic materials II industry index, with correlation coefficients of 0.531 and 0.698 respectively; Products and potash industry indexes have a strong correlation, and the correlation coefficients are 0.509, -0.626, -0.515, and 0.583, respectively. Compared with the correlation results between oil prices and the profits of various chemical sub-sectors, there is a significant correlation between oil prices and more basic chemical sub-industry indexes, which may be due to the impact of oil price fluctuations on people's psychological state. As mentioned above, the results of this analysis are only a regular summary of the correlation between oil prices and the industry indexes of various sub-sectors of the chemical industry. It does not mean that there is a causal relationship between the rise and fall of oil prices and the rise and fall of industry indexes. , industry policies, business management status, natural factors and other factors. This analysis focuses on the overall performance of various sub-sectors of the chemical industry, and does not rule out the existence of a strong correlation between individual companies and the rise and fall of oil prices.