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Petroleum industry

Mainland Oil Giants Rally on Rising International Oil Prices

Strategic Insights

— 1 min read

Shares of mainland oil giants continued to ride the momentum of increasing international oil prices and Beijing's decision to hike petrol and diesel prices. Oil producer CNOOC outpaced refiner China Petroleum & Chemical Corp (Sinopec), while CNOOC's stock has surged 74.8% since the beginning of March. Analysts predict that the trend of oil producers outperforming refiners will persist due to expected price hikes and anticipation of economic recovery.

Key Takeaways:

  • Oil producer CNOOC outperformed refiner China Petroleum & Chemical Corp (Sinopec) with a 9.02% gain yesterday, closing up 8.82% at HK$11.10.
  • CNOOC's stock has surged 74.8% since the beginning of March, when international oil prices started to climb.
  • PetroChina, which produces and refines oil products, gained 5.62% at HK$9.39, while its A shares firmed 4.89% to 14.17 yuan.
  • Sinopec, which sources 75 to 80% of its oil from overseas markets and focuses on the downstream business, had the smallest gain among its peers, rising 3.38% to HK$6.43.
  • Analyst Qiu Xiaofeng expects the trend of oil producers outperforming refiners to continue for a while due to rising oil prices.
  • Credit Suisse Private Banking's Timothy Fung suggests that the Chinese government may raise the retail price of petrol and diesel fuel again until the international oil price reaches US$80 a barrel.

Statistics:

  • Oil prices rose to more than US$67.50 a barrel yesterday in morning trading on the New York Mercantile Exchange.
  • The ceiling retail price of petrol and diesel would increase by 400 yuan per tonne on the mainland from today, up 7 and 8% respectively.
  • International oil prices are expected to continue rising due to weakness in the US dollar and anticipation of economic recovery.
  • Oil prices are not expected to go above US$80 in the near term due to insufficient demand.
  • CNOOC's stock has surged 74.8% since the beginning of March.

Sources:

  • China Merchants Securities
  • Credit Suisse Private Banking
  • New York Mercantile Exchange

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