Cathay Pacific Securities: Powell may turn dovish, international oil prices rebound

According to the Zhitong Finance APP, Guotai Junan Securities released a research report stating that many institutions interpret the recent remarks by Federal Reserve Chairman Jerome Powell as dovish signals. Against the backdrop of interest rate cut expectations, dollar-denominated crude oil is attracting more buyers, which is expected to support mid-term crude oil demand. There have been no substantial results regarding the Russia-Ukraine ceasefire issue, and attention needs to be paid to the impact of sanctions on Russia on overall supply and demand. Additionally, the latest weekly report from the EIA shows that U.S. crude oil inventories fell more than market expectations. Overall, short-term oil prices are strongly supported, while mid-term attention should focus on the impact of OPEC's production increase and downstream demand after the peak season.

Guotai Junan's main viewpoints are as follows:

Powell's speech releases dovish signals

On August 22, Federal Reserve Chairman Jerome Powell delivered a speech at the annual economic symposium held in Jackson Hole, Wyoming, suggesting that despite current inflationary risks, the Federal Reserve may still cut interest rates in the coming months. According to his statements, the Federal Reserve's monetary policy stance may need to be adjusted. After the speech, many institutions interpreted Powell's remarks as dovish signals. Against the backdrop of interest rate cut expectations, dollar-denominated crude oil is attracting more buyers, which is expected to support mid-term crude oil demand.

Focus on geopolitical factors' disturbances

After the U.S.-Russia talks concluded on August 21, the overall outcome was in line with market expectations, and no substantial results were achieved regarding the Russia-Ukraine ceasefire issue. Attention needs to be paid to the impact of sanctions on Russian oil on overall supply and demand, as well as the substantial changes in India's energy imports from Russia. Currently, the overall supply-demand balance is limited, with marginal drivers being the main focus.

Crude oil inventories decline more than expected

In terms of fundamentals, the latest weekly report from the U.S. Energy Information Administration (EIA) shows that U.S. crude oil inventories decreased by 6 million barrels, a decline that exceeded market expectations and marked the largest weekly drop since June. The inventory decline was driven by two main factors: first, refinery operating rates are strong, currently reaching the highest level for the same period since 2019; second, crude oil export volumes have rebounded, reaching a high point since April, with an average daily export volume of 4.38 million barrels.

Investment recommendations: According to Bloomberg reports, China is expected to gradually introduce multiple "anti-involution" policies, such as clearing outdated production capacity and strictly controlling capacity supply. As the Political Bureau meeting convenes, downstream demand is also expected to recover, accelerating the repair of industry price spreads.

① Recommend industry concentration improvement, with downstream peak season replenishment demand approaching, leading industry leaders in the long filament sector, Xin Feng Ming (603225.SH) and Tong Kun Co., Ltd. (601233.SH);

② Recommend refining leaders benefiting from the "anti-involution" background, Hengli Petrochemical (600346.SH) and Rongsheng Petrochemical (002493.SZ);

③ From a medium to long-term perspective, recommend upstream undervalued high-dividend stocks, China National Offshore Oil Corporation (00883) and China Petroleum (00857), and recommend Kunlun Energy (00135) for stable cash flow.

Risk warning: Global economic recession exceeds expectations, geopolitical events exceed expectations, and strategic reserves are released beyond expectations