As learned from the ICT Financial News App, Galaxy Securities has released a research report stating that on June 2nd, the OPEC+ meeting announced that the voluntary production reduction measures of 1.65 million barrels/day announced in April 2023 will be extended to the end of 2025. The voluntary production reduction measures of 2.2 million barrels/day announced in November 2023 will be extended to the end of September 2024, and gradually withdrawn from October 2024 to September 2025 depending on market conditions. In the short term, with the arrival of the summer driving season in the United States, the refinery operating rate in the United States has rebounded to 94.3%, and it is expected to remain high in the future, coupled with the continuation of OPEC+ production cuts, which is expected to support oil prices. However, considering the expected rebound in supply expectations in the fourth quarter, the expected oil supply and demand is loose, which may limit the upward momentum of oil prices.

On the supply side, the geopolitical situation in Europe and the Middle East has cooled down, and the geopolitical premium has been reversed. On the demand side, the expectation of a Fed rate cut has been repeatedly postponed. Under a high interest rate environment, the expected economic growth rate in Europe and the United States in the far term is expected to be under pressure, and the growth rate of oil consumption may slow down. In addition, it is expected that Brent crude oil prices will range from 75-85 US dollars/barrel in the near future. The monthly average prices of Brent and WTI in May were 83.0 and 78.6 US dollars/barrel, respectively, with month-on-month declines of 6.7% and 6.8%, respectively.

From January to April, China's crude oil apparent demand increased slightly, with a year-on-year increase of 1.9%; From January to April, China processed 241 million tons of crude oil, a year-on-year increase of 1.1%; crude oil production was 71 million tons, a year-on-year increase of 1.9%; crude oil imports were 182 million tons, a year-on-year increase of 1.8%; crude oil apparent consumption was 253 million tons, a year-on-year increase of 1.9%; external dependence was 71.9%, remaining high.

From January to April, China's apparent demand for natural gas increased significantly, with a year-on-year increase of 12.0%. From January to April, China's apparent consumption of natural gas was 141.1 billion cubic meters, a year-on-year increase of 12.0%; production was 83 billion cubic meters, a year-on-year increase of 5.0%; imported natural gas was 59.8 billion cubic meters, a year-on-year increase of 20.7%; external dependence was 41.2%.

From January to April, China's apparent demand for refined oil steadily increased, with a year-on-year increase of 7.9%; From January to April, China's production of refined oil was 144 million tons, an increase of 5.4% year-on-year; exports were 12.92 million tons, a year-on-year decrease of 15.3%.

In April, China's gasoline and diesel exports fell sharply from the high level, mainly due to factors such as declining export profits and declining demand in the Asian market. The apparent consumption of refined oil was 131 million tons, an increase of 7.9% year-on-year. Among them, the apparent consumption of gasoline, kerosene, and diesel increased by 10.1%, 34.7%, and 2.3% year-on-year, respectively.

Investment suggestion: It is expected that oil prices will operate at a medium to high level in the near future. It is recommended to pay attention to leading companies with cyclical elasticity under domestic demand repair and implementation of scale expansion. Baofeng Energy Group (600989.SH), Satellite Petrochemical (002648.SZ), Gon Technology (002768.SZ), etc. are recommended.

Risk warning: The risk of a sharp rise in raw material prices, the risk of lower-than-expected downstream demand, the risk of a decline in the business climate of main products, the risk of unexpected project completion, etc.