The Zhitong Finance App learned that Fangzheng Securities released a research report saying that according to EIA data, global crude oil demand in 2023 was 101.07 million b/d, an increase of 1.92 million b/d over the previous year, and global crude oil supply was 101.73 million b/d, an increase of 1.75 million b/d over the previous year. Oil prices at the end of 2023 were basically the same as at the beginning of the year due to a basic match between supply and demand growth. Despite this, due to the impact of non-market-based factors: OPEC+ joint production cuts and the Red Sea crisis caused by the Arab-Israeli conflict, oil prices fluctuated greatly in 2023. Maintaining a volatile trend in oil prices helps crude oil extraction companies to stabilize their performance. It is recommended to focus on CNOOC (600938.SH), CNPC (601857.SH), and Zhongman Petroleum (603619.SH).

▍ The main views of Fangzheng Securities are as follows:

2023 price review:

According to EIA data, global crude oil demand in 2023 was 10.07 million b/d, an increase of 1.92 million b/d over the previous year, and global crude oil supply was 101.73 million b/d, an increase of 1.75 million b/d over the previous year. Oil prices at the end of 2023 were basically the same as at the beginning of the year due to a basic match between supply and demand growth. Despite this, due to the impact of non-market-based factors: OPEC+ joint production cuts and the Red Sea crisis caused by the Arab-Israeli conflict, oil prices fluctuated greatly in 2023.

Demand side: Financial institutions forecast a slowdown in global economic growth in 2024, and demand growth still mainly comes from developing countries.

The World Bank estimates a 2.6% global GDP growth rate in 2023, while predicting a 0.2 percentage point drop to 2.4% in 2024. In light of concerns about a slowdown in economic growth, the EIA predicts that global crude oil demand will increase by 1.39 million b/d in 2024, down 540,000 b/d from 2023. At the same time, demand growth still comes from developing countries such as China and India.

In 2023, China added 790,000 b/d, accounting for 41.2%, which is the main driving force for the increase in global crude oil consumption. The increase in demand for crude oil in China was mainly due to the increase in gasoline and diesel consumption. The annual apparent consumption of gasoline/diesel was 14910/20.365 million tons, +12.3%/+10.2% year-on-year. Entering 2024, the growth rate of China's crude oil consumption will slow to 330,000 b/d in 2024 due to the lack of construction of new refineries in China, as well as factors such as a high gasoline and diesel consumption base and an increase in the penetration rate of new energy vehicles, according to EIA forecasts. Excluding China, the EIA predicts demand growth in India and the US to be 280,000 b/d in 2024.

Supply side: The increase in global crude oil production mainly comes from the US.

On the basis of oil prices remaining high, the growth rate of US crude oil production in 2023 was 1.58 million b/d, accounting for 90.4% of the new global supply in that year. Affected by factors such as rising extraction costs, the EIA predicts that the growth rate of US crude oil production will drop to 390,000 b/d in 2024, a decrease of 1.2 million b/d compared to the 2023 growth rate.

Given that OPEC and other institutions expect the growth rate of global crude oil demand to fall back in 2024, there is great uncertainty about the extent to which the growth rate of US crude oil production will decline, and it is expected that the pressure to reduce OPEC+ production to stabilize oil prices will increase. Therefore, it is expected that oil prices will maintain a volatile trend in 2024, and the oil price center will remain basically the same as in 2023.

Risk warning:

The risk of overseas economic recession, the risk of the intensification of the Venezuelan territorial conflict, the risk of the Russian-Ukrainian conflict spreading, the risk of the escalation of the situation in the Middle East, and the risk of uncertainty in implementing OPEC production cuts.