China Galaxy Securities: Oil price focus tends to decline, seize opportunities in niche markets

According to the Zhitong Finance APP, China Galaxy Securities has released a research report stating that it expects the recent Brent crude oil price to trend downwards, with a price range reference of $62-69 per barrel. The pressure on the industry's cost side is expected to ease, and the terminal demand during the "Golden September and Silver October" period is likely to strengthen seasonally. Investment opportunities in sectors such as light hydrocarbons, polyester filament, and modified plastics are promising. It is recommended to pay attention to STL (002648.SZ), XfmGroup (603225.SH), and GON (002768.SZ).

The main points of China Galaxy Securities are as follows:

August oil price center slightly declines

In August, the average monthly prices for Brent and WTI were $67.3 and $64.0 per barrel, respectively, down 3.3% and 4.7% month-on-month. On the supply side, on August 3, OPEC+ eight member countries agreed to increase oil production by 548,000 barrels per day in September to accelerate the competition for global crude oil market share. This marks the organization's announcement of an increase in production plans for five consecutive months, driving global crude oil supply expectations upward. In addition, the Russia-Ukraine issue continues to be negotiated, with Ukraine agreeing in principle to exchange territory for peace, leading to a decline in geopolitical premiums.

On the demand side, crude oil consumption in September will switch to the off-season, and demand momentum may weaken month-on-month. As of August 22, the operating rate of U.S. refineries was 94.6%, down 2.3 percentage points from early August. According to seasonal patterns, the operating rate of U.S. refineries is expected to decline seasonally in the future. On the inventory side, as of the week of August 22, U.S. commercial crude oil inventories stood at 418.29 million barrels, a decrease of 5.37 million barrels from early August.

The bank believes that with the end of the consumption peak season and the increase in OPEC+ production, the current expectations for crude oil supply and demand are relatively weak. In the absence of extreme geopolitical events, the oil price center is expected to trend downwards. It is anticipated that Brent crude oil prices will operate in the range of $62-69 per barrel in the near future. It is recommended to closely monitor geopolitical situations, OPEC+ production policies, and global trade dispute guidance.

From January to July, China's apparent crude oil demand slightly increased, up 1.6% year-on-year

From January to July, China's crude oil processing reached 425 million tons, a year-on-year increase of 2.6%; crude oil production was 127 million tons, up 1.3% year-on-year; crude oil imports totaled 327 million tons, an increase of 2.8% year-on-year; apparent crude oil consumption was 450 million tons, up 1.6% year-on-year; the external dependence rate was 72.6%, remaining at a high level.

From January to July, China's apparent natural gas demand slightly increased, up 0.4% year-on-year

From January to July, China's apparent natural gas consumption was 245.5 billion cubic meters, a year-on-year increase of 0.4%; production was 152.5 billion cubic meters, up 6.1% year-on-year; imports were 96.9 billion cubic meters, down 6.9% year-on-year; the external dependence rate was 39.5%, a year-on-year decrease of 3.1 percentage points.

From January to July, China's apparent demand for refined oil declined, down 5.0% year-on-year

From January to July, China's refined oil production was 236 million tons, a year-on-year decrease of 5.7%; refined oil exports were 20 million tons, down 11.3% year-on-year. Among them, in July, diesel domestic demand entered the off-season, and the substitution of new energy intensified the domestic supply-demand surplus. In addition, the export arbitrage space was relatively loose, leading to a month-on-month increase of 145.0% in diesel exports in July. From January to July, the apparent consumption of refined oil was 216 million tons, down 5.0% year-on-year Among them, the apparent consumption of gasoline, kerosene, and diesel decreased by 7.2%, 1.6%, and 4.0% year-on-year, respectively.

Risk Warning: Risks of intensified international trade frictions, significant increases in raw material prices, downstream demand being lower than expected, declining prosperity of main products, and risks of project production not meeting expectations, etc