Crude Oil Soars! Or Will Exceed 100 US Dollars!

Affected by the cold weather in the United States and supply disruptions in major oil-producing countries in the world, international oil prices hit a seven-year high on Friday (4th), rising for the seventh consecutive week. Brent crude futures rose $2.16, or 2.4%, to settle at $93.27 a barrel, having earlier hit $93.70, the highest since October 2014. U.S. crude futures settled up $2.04, or 2.3%, at $92.31 a barrel, after rising as high as $93.17 during the session, the highest since September 2014.

Crude oil faces supply disruption risk, rising more than 40% this year

The lack of actual production capacity of international crude oil has become the biggest concern in the current crude oil market. The data shows that since the beginning of December last year, the price of crude oil has started to rise all the way, and the settlement prices of Brent and WTI crude oil have increased by 33.11% and 40.93% respectively.

The U.S. state of Texas was hit by a winter storm, canceling more than 5,000 flights across the United States and powering about 350,000 customers, causing investors to worry about the impact on production in the nation's largest shale oil producing region in Texas. In addition, the tension between Russia and Ukraine has made it difficult to remove geopolitical risks and will continue to play a role in oil prices, which may lead to further tightening of crude oil supply.

On the inventory side, data from the U.S. Energy Information Administration (EIA) showed that U.S. crude oil inventories fell by 1 million barrels to 415.14 million barrels in the week ended January 28. Except for Russia, new proven oil and natural gas inventories were added around the world last year. Reserves hit their lowest level since 2008. The market is generally worried that under the influence of cold weather in the United States, production may be affected, and inventories may continue to decline, which will support oil prices.

Crude oil may exceed 100 US dollars / barrel, chemical stocks respond quickly
Under the situation that the global crude oil supply and demand fundamentals continue to maintain a tight balance, the crude oil price forecast also fluctuates upward. Goldman Sachs forecast Brent to top $100 in the third quarter, and Morgan Stanley also raised its forecast to $100 a barrel.

As the source of the chemical industry chain, the supply interruption and price rise of oil have also affected the stock prices of petrochemical companies such as US stocks and Hong Kong stocks. In the US stock market, Marathon Oil rose 3.17%, Exxon Mobil rose 2.17%, Total rose 2.03%, Sinopec rose 1.65%, Chevron rose 1.25%, Shanghai Petrochemical rose 1.21%, Bayer rose 0.4%, LyondellBased Seoul rose 0.21%.

In the Hong Kong stock market, China Shenhua rose 4.82%, Tiande Chemical rose 4.07%, Kunlun Energy rose 3.23%, Science and Culture rose 2.33%, CNOOC rose 1.5%, and Sanjiang Chemical rose 1.29%.

It is currently the Spring Festival holiday, and the whole country is celebrating together. Although the Shanghai and Shenzhen markets are closed, the huge boom in Hong Kong and US stocks undoubtedly responded to the rise in crude oil. Whether it is a bulk product at the source or a non-renewable energy source, the shortage of oil and rising prices have a huge impact on the chemical industry, especially for chemical fertilizers, chlor-alkali and other chemicals that use oil as an important raw material. In addition, the cost of road freight of chemicals using gasoline as the main fuel is also increasing rapidly.

Institutional analysis shows that in 2022, inflation protection, energy transition, geo-risks, reopening and insufficient investment will continue to support commodity prices.