The international crude oil market is gradually returning to fundamental-driven pricing, with continued inventory drawdowns pushing up oil prices.
Currently, the international crude oil market is gradually returning to fundamental pricing from the panic trading of ‘premium-driven oil prices’ in March.
The most intuitive data shows that the contango of the near-month futures contract for New York WTI has fallen by about 60% from its peak. The volatility index of domestic crude oil options has halved from its high point, while the scale of funds settled in crude oil futures has dropped by more than 40%.
However, a return to fundamental pricing does not necessarily mean that oil prices will fall. On the contrary, the blockade of Iranian ports by the United States may accelerate the depletion of global oil inventories.
UBS Group believes that if the strait blockade continues until the end of April, international oil prices could reach $130 per barrel, significantly increasing the risk of a global economic recession.
Malcolm Melville, energy fund manager at Schroders Investment, stated that the near-complete blockade of the Strait of Hormuz has caused unprecedented severe disruptions to energy transportation. The normal daily oil flow through the strait is 20 million barrels but has now plummeted to 2 to 3 million barrels per day. Asian and European countries are more affected by the conflict in Iran due to their limited oil reserves. It would not be surprising if they manage to address this issue over the next few years. These long-term factors are expected to provide support for oil prices in the medium term.
Zhitong Finance APP noted that HSBC Private Banking and Wealth Management has downgraded its rating for emerging market equities in Asia while significantly reducing its positions in India. In response to the risks associated with the Iran conflict and oil price shocks, the bank increased allocations to gold, cash, and hedge funds.
A report released on Wednesday by data platform Hazeltree showed that as the war in Iran entered its seventh week, hedge funds have flooded into energy stocks, with long positions increasing by over 10% since February.
The weekend negotiations between the US and Iran failed, resulting in the US Navy blockading oil tankers at Iranian ports. The energy sector has risen by over 22% this year alongside rising oil prices.
The report noted that 55% of companies tracked by Hazeltree have received bullish bets on energy stocks. Its data covers 600 asset management institutions and 16,000 global equities.
Compared with February, 44% of asset management firms have increased their number of long positions by more than 10%.
Morgan Stanley data also showed that as of the week ending April 10, the energy sector was the only segment in the U.S. stock market to see net buying, with hedge funds adding to their long positions in oil-related assets.
Hong Kong-listed stocks related to the crude oil industry chain:
CNOOC (00883), PetroChina (00857), COSL (02883), etc.