Since the beginning of 2024, Brent oil prices have increased by a total of about 13%. The rise in oil prices may maintain the high capital expenditure intentions of oil and gas companies, and demand for oil service equipment continues to boom.
The Zhitong Finance App learned that Zhishang Securities released a research report saying that according to the Blue Book on the Development of China's Petroleum Distribution Industry, international oil prices will fluctuate widely in 2024, and oil prices will run at 70 to 85 US dollars/barrel throughout the year. Since the beginning of 2024, Brent oil prices have increased by a total of about 13%. The rise in oil prices may maintain the high capital expenditure intentions of oil and gas companies, and demand for oil service equipment continues. Looking ahead to 2024, we are optimistic about deep-sea and unconventional oil and gas development fields, and as environmental requirements in the North American oil and gas market increase and the renewal cycle of old equipment approaches, electric drive fracturing equipment is expected to benefit.
Recommended targets: Jerry Co., Ltd. (002353.SZ), Huatong Cable (605196.SH), optimistic about CNOOC (601808.SH), CNOOC engineering (600583.SH), CNOOC development (), petrochemical machinery (000852.SZ), Dewey (USD), Bomeco (), etc. 600968.SH 688377.SH 603727.SH
The main views of Zheshang Securities are as follows:
Geopolitical conflicts are frequent, and international oil prices fluctuate widely
According to the “Huaxia Times” information, the current supply and demand pattern supports international oil prices at the level of 80 US dollars/barrel. The impact of the geographical situation is the main reason why international oil prices are close to 90 US dollars/barrel recently. The subsequent trend is largely dependent on local conflicts. Demand side: The International Energy Agency (IEA) and “OPEC+” have raised global oil demand expectations. Supply side: “OPEC+” adjusted the crude oil production target to 40.46 million b/d and extended production reduction measures until the end of 2024. Geopolitics: Conflicts between Russia and the West, the Middle East issue, Iran nuclear negotiations, and Sino-US relations will all cause oil price fluctuations. According to the Blue Book on the Development of China's Petroleum Distribution Industry, international oil prices will fluctuate widely in 2024, and oil prices will run at 70 to 85 US dollars/barrel throughout the year.
Global: Steady growth in oil and gas capital expenditure favors deep-sea and unconventional oil and gas development opportunities
According to S&P Global (S&P Global)'s “Global Upstream Capital Expenditure Research Report”, the global upstream exploration and development capital expenditure in 2023 will be US$567.8 billion, up 10.6% year on year; global oil demand continues to increase in 2024, and oil companies will continue to increase oil and gas development efforts, especially ultra-deep water oil field development and unconventional oil and gas development. The global upstream exploration and development capital expenditure is expected to be around US$607.9 billion, up 5.7% year on year. According to Spears & Associates estimates The size of the global oil field service market increased by 7.1% year on year in 2024.
British Petroleum and Shell revealed that capital expenditure for 2024 was US$16 billion and US$22-25 billion respectively, a slight decrease from 2023. Total Energy's capital expenditure plan for this year is US$170-18 billion, a slight increase from 2023 (US$160-18 billion).
National energy security drives capital expenditure and demand for oil service equipment is expected to remain high
According to the “2023 Oil and Gas Industry Development Report” issued by CNPC Economic and Technological Research Institute, China continues to step up exploration and development efforts, investing about 390 billion yuan in oil and gas exploration and development, an increase of 10% over the previous year. In 2024, the total capital expenditure of “three barrels of oil” is expected to increase by about 9%. According to the 2023 annual reports of CNPC, Sinopec, and CNOOC, the estimated capital expenditure for 2024 is 258, 1730, and 1250-135 billion yuan, respectively, up 6.0%, 4.3%, and 23.8% year-on-year (based on central calculation), for a total increase of 9.1% year-on-year.
China will continue to strengthen the role of fossil energy security backstopping
In March 2024, the National Energy Administration issued the “2024 Energy Work Guiding Opinions”, which clearly insist on putting the country's energy security first, stabilizing crude oil production at over 200 million tons, maintaining a rapid production trend of natural gas, strengthening fossil energy security guarantees, thoroughly studying and implementing medium- and long-term oil and gas storage and production development strategies, increasing oil and gas exploration and development efforts, promoting stable production in old oil fields, speeding up production in new areas, and strengthening oil and gas production capacity construction in the “two depths, one not one stability” key area. Zheshang Securities anticipates that the domestic oil service market will maintain a positive trend, and that demand for new and replacement oil supplies will continue.
Risk warning
Risk of a sharp drop in oil prices; fluctuations in overseas exchange rates; increased competition in the industry.