Why is the price of crude oil rising so fast?

On Thursday, OPEC+(OPEC and non-OPEC oil producers) announced that it would extend the oil production reduction agreement until the end of April. On hearing the news of production reduction, not only did the international oil price rise first, but Goldman Sachs even predicted that the oil price would exceed $80/barrel in the third quarter.

I still remember that about a year ago, the international oil price went "negative" overnight, which caused the big oolong of BOC crude oil treasure. How has the international oil price changed in less than a year?

Crude oil is not only the king of commodities, but also an important theme in the stock market. This paper will discuss the opportunities behind the V-shaped reversal of oil prices from three aspects:

Causal game

I. Antecedents

Oil demand is closely related to the international economic situation. Therefore, when the epidemic swept the world and the stock market plummeted a year ago, the demand for oil was naturally depressed under pessimistic economic expectations.

On the supply side, there are less than 20 major oil exporting countries in the world. If these countries can keep pace, in theory, they can control oil prices at will. In order to achieve this goal, Saudi Arabia, which is rich in oil, took the lead and led the oil-producing countries to set up the Organization of Petroleum Exporting Countries to raise prices by limiting production. In the concept of economics, organizations like the Organization of Petroleum Exporting Countries are called cartels.

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Although it seems that it can make a difference in the crude oil market, in fact, the Organization of Petroleum Exporting Countries has to face three mountains:

1. Contradictions among members of the Organization of Petroleum Exporting Countries

Only when all members of the Organization of Petroleum Exporting Countries seriously implement the production reduction agreement can the international oil price be at a high level. But the problem is that reducing production also means that there is no market. The so-called high oil price is just to face wealth. Therefore, from the perspective of the game, every member country has the motivation to secretly increase production when other countries cut production, and quickly put wealth on their faces-but if all member countries think so, the so-called production reduction agreement is just a dead letter.

In addition, the Middle East countries, as major oil producers, have the same beliefs and speak the same language, but none of them will obey each other. Not to mention that Saudi Arabia and Iran have raised two mountains, Sunni and Shiyan, respectively, and even Saudi Arabia can't handle the younger brother in its own camp. For example, Qatar has long disliked Saudi Arabia, so it withdrew from the Organization of Petroleum Exporting Countries at the beginning of 20 19.

2. The contradiction between OPEC and non-OPEC oil-producing countries

Non-OPEC oil producers used to be mainly Russia.

Although Russia has fallen from a world hegemon to a second-rate country that makes a living by selling resources, the thin camel is bigger than a horse, with a vast territory and abundant resources, and it is also worth having military strength beyond the chart. Russia is still the focus of attention in Europe and America.

Therefore, Russia is not afraid of the hard work of Saudi Arabia. After all, the latter is only a feudal country with a gold-plated surface. Russia is not a member of the Organization of Petroleum Exporting Countries, so it has no obligation to abide by the production reduction agreement. Therefore, the reduction in production by the Organization of Petroleum Exporting Countries made oil prices rise, but Russia profited from it.

What's more, it's not just a question of Saudi Arabia and Russia governing the river now, but a situation in which Saudi Arabia, Russia and the United States are in a tripartite confrontation.

3. The influence of shale oil

Shale oil can be simply understood as low-grade crude oil (it is not very strict academically here and needs oil shale resources). However, technological progress and rising oil prices will make resources that once had no exploitation value profitable.

In fact, the United States itself has a lot of oil resources, and there are many large oil fields in the Gulf of Mexico, which are close at hand. Later, shale oil greatly increased the supply of oil, coupled with the outflow of American manufacturing, which led to a decline in oil demand-the United States changed from an oil importer to an exporter.

Shale oil has moved the cheese of traditional oil-producing countries, and Saudi Arabia and Russia have long been dissatisfied with shale oil. But shale oil is at a disadvantage in cost. Depending on the mining conditions, the cost of shale oil is about 30 to 50 dollars per barrel, which is much higher than that of Saudi Arabia and Russia.

So, about this time last year, Saudi Arabia took out the consciousness of killing one thousand enemies and losing 800, increased production in large quantities and sold crude oil in a big sale, with the intention of crushing American shale oil. It really worked. In the second quarter of last year, Chesapeake Energy Company, the pioneer of shale oil drilling in the United States, saw its market value plummet by more than 90% and filed for bankruptcy protection, which became the biggest bankruptcy event in the industry in the past five years.

Two. result

Saudi Arabia's goal was initially achieved, and Prince Salman said in a high-profile manner: "The era of drilling (American shale oil) has ended forever."

Finally, it is possible to limit production and raise prices-Saudi Arabia, which is full of confidence, even agreed to a small increase in production in Russia. But Saudi Arabia may be happy a little early, and there are two logics that will secretly erode the foundation of its confidence:

1. With the further increase of oil price, shale oil may make a comeback. After all, it's only Uncle Sam's company that went bankrupt financially, but the technology is still there. Even if the company can't make a comeback after bankruptcy, it can still make money with shale oil drilling technology. Although the number of shale oil wells in the United States has not recovered to the pre-epidemic level, it has started to rise from the low point in 2020;

2. The rise in oil prices is undoubtedly helping alternative energy sources such as photovoltaic and wind energy, as well as new energy vehicles. According to the law of economics, the price increase of a commodity will stimulate the demand for its substitutes. If we go back to the era of high oil prices, wouldn't the "People's God Car" Wuling Hong Guang mini EV with a full charge of only 5 cents be more fragrant?

Three. counter-measure

Despite OPEC's efforts to control the market, international oil prices still show obvious periodicity.

The surge in international oil prices will undoubtedly directly benefit the "three barrels of oil"-China Petroleum (60 1857), China Petrochemical (600028) and CNOOC (US stock code CEO). However, from the long-term trend of stock prices, especially PetroChina and Sinopec, there is no growth, but it is too much to give periodic stocks a chance to trade in the band. Talking too much is all tears.

In fact, Buffett, who is good at consumer stocks, also buys cyclical stocks. The stock god once made a fortune at the bottom of Hong Kong stocks more than ten years ago. However, Buffett began to clear the position after holding it for three years, which means that the stock god participated only because PetroChina oversold and was not optimistic about the long-term prospects.

However, if we expand our eyes to the whole oil and gas sector and even the traditional industrial fields, there are actually some opportunities worthy of attention.

For example, in July 2020, Buffett's Berkshire Hathaway Company acquired a group of natural gas pipeline companies with a total transaction amount of about 654.38+0 billion US dollars.

Image source: this newspaper

Inspired by the stock god, we can pay attention to the following two investment logics for the countermeasures of rising oil prices:

1. Under the theme of carbon neutrality, natural gas with low carbon emission in fossil energy will expand its production capacity due to the surge in demand. BP (British Petroleum Company) once predicted in the report that by 2035, the consumption of natural gas in primary energy (which can be directly utilized from nature) will be close to 25%, second only to oil. Because oil and gas prices are positively related, rising oil prices will also drive up the price of natural gas;

2. Pipeline is one of the most important ways of natural gas transportation. At present, China is vigorously strengthening the construction of natural gas pipeline network, and three barrels of oil have stripped off pipeline assets and transferred them to pipeline network companies. Moreover, the pipeline network construction in China is still in the construction period, so the suppliers of pipeline materials will meet the demand increase.

For more details, please pay attention to WeChat official account "Star Fortune" (ID:xingkongcaifu 1).