Report Summary 1. Industry Investment Rating No investment rating information is provided in the report. 2. Core View The report indicates that due to the Middle - East tensions increasing the risk premium, crude oil prices have risen for two consecutive days. The geopolitical tensions this year have overshadowed concerns about global supply surplus. The market will get insights from a series of data this week, starting with the EIA's monthly short - term energy outlook report. The short - term oil prices are still affected by the Iran situation, and the global crude oil supply - demand fundamentals in the first and second quarters remain in a surplus state, not supporting high valuations [3][5]. 3. Summary by Directory 3.1 Daily News - Middle - East tensions have pushed up the risk premium, causing oil prices to rise for two consecutive days. WTI crude oil has traded above $64 per barrel after a 1.7% increase in the past two trading days, and Brent crude oil has closed above $69. The US warned that US - flagged vessels should stay away from Iranian waters when passing through the Strait of Hormuz [3]. - The US Maritime Administration's warning was related to an incident on February 3 when a US - flagged oil tanker was approached by Iranian gunboats in the Strait of Hormuz [4]. - Venezuelan crude oil production has approached 1 million barrels per day after returning to the pre - cut level [4]. - US sanctions have led to a continuous decline in Russian crude oil production. In January, Russia's average daily crude oil production was 9.28 million barrels, 46,000 barrels per day less than in December and nearly 300,000 barrels per day lower than the quota in the OPEC+ agreement. The amount of Russian oil stored on tankers has been increasing [5]. 3.2 Inventory - This week, crude oil has fluctuated at a high level due to the Iran situation, with the month - spread falling and the North Sea Brent basis dropping to $1.005 per barrel. The US and Iran held a six - hour nuclear negotiation on Friday, with Iran calling it a good start. A second round of negotiations is expected in the coming days. - Globally, the total petroleum inventory has decreased. In the US, commercial crude oil inventory decreased by 3.455 million barrels and refined oil inventory decreased by 5.553 million barrels. Saudi Arabia adjusted the official selling prices of Arabian light crude oil for March. - In Singapore, all refined oil products have seen inventory accumulation. In ARA, crude oil inventory has decreased, while refined oil products, diesel, and gasoline have seen inventory accumulation. In China, both gasoline and diesel inventories have increased [5]. 3.3 EIA Report - For the week ending January 30, US crude oil exports decreased by 542,000 barrels per day to 4.047 million barrels per day [15]. - US domestic crude oil production decreased by 481,000 barrels to 13.215 million barrels per day [15]. - Commercial crude oil inventory (excluding strategic reserves) decreased by 3.455 million barrels to 420 million barrels, a decrease of 0.82% [15]. - The four - week average supply of US crude oil products was 20.802 million barrels per day, a year - on - year increase of 0.94% [15]. - The US Strategic Petroleum Reserve (SPR) inventory increased by 214,000 barrels to 415.2 million barrels, an increase of 0.05% [15]. - US imports of commercial crude oil (excluding strategic reserves) were 6.201 million barrels per day, an increase of 559,000 barrels per day compared to the previous week [15].

Core Viewpoint - Citigroup's report indicates that despite initial market expectations of a significant oversupply of crude oil, prices may remain higher than anticipated, with recent events not fully explaining the strength in prices [1] Group 1: Current Oil Prices - Brent crude oil is currently hovering around $68 per barrel, significantly above the expected price of approximately $50 per barrel in an oversupply environment [1] - Citigroup has long anticipated an average oil price of $60 per barrel for this year [1] Group 2: Factors Influencing Prices - Several factors contributing to the current price stability above $60 per barrel include production disruptions in Kazakhstan, severe winter weather in the U.S., geopolitical tensions in the Middle East, and tightened restrictions on U.S. purchases of Russian oil [1] - As the weather in the U.S. warms and Kazakhstan's Tengiz oil field resumes production, oil prices may ease, potentially narrowing the price gap between Brent and Dubai crude [1] Group 3: Inventory Trends - Global and U.S. oil inventory data shows a decline in crude oil inventories, while refined product inventories are on the rise [1] - The winter storm "Fern" has impacted much of the U.S., affecting recent data and leading to increased heating demand, which may exacerbate diesel supply tightness [1] - Refining activities have been disrupted due to freezing conditions, impacting U.S. crude oil production, and oil trade along the Gulf Coast may also be affected [1]

Group 1 - The main crude oil futures contract closed at 441.9 yuan per barrel, with a weekly increase in open interest by 3,756 contracts [1] - During the week of January 19 to January 23, crude oil futures opened at 443.2 yuan per barrel, reaching a high of 448.6 yuan and a low of 434.4 yuan, resulting in a weekly change of 0.50% [1] Group 2 - The Dubai oil authority set the official discount for April shipments of Dubai crude relative to Oman crude futures at 30 cents per barrel, linked to the average settlement price of the Oman crude near-month contract [2] - The EIA report indicated a decrease in U.S. crude oil exports by 618,000 barrels per day to 3.688 million barrels per day, and a reduction in domestic crude oil production by 21,000 barrels to 1.3732 million barrels per day [2] - Venezuela's proposed oil law reform will allow the state oil company to operate joint ventures with foreign and local partners, enabling direct commercialization of production and receipt of sales revenue [2] Group 3 - Current market dynamics reflect a balance between oversupply and geopolitical risks, with short-term expectations hinging on developments in Iran, where potential U.S. military actions could drive oil prices higher [4] - Increased crude oil inventories and signs of progress in Russia-Ukraine negotiations are putting slight pressure on oil prices, with U.S. gasoline inventories reaching their highest level since 2001 [4] - Venezuelan supply is returning to the market, and Indian refiners are resuming purchases of Russian crude, while cold weather is expected to boost U.S. demand, providing some price support [4]

Core Viewpoint - CNOOC Services (02883) saw a nearly 5% increase, with a current rise of 3.91% to HKD 7.97, and a trading volume of HKD 140 million, driven by geopolitical tensions affecting oil prices [1] Group 1: Market Impact - U.S. President Trump's intensified rhetoric against Iran has raised market concerns about potential U.S. intervention, leading to a spike in international oil prices, reaching a two-month high [1] - LSEG data indicates that geopolitical tensions in Iran and Venezuela have supported global benchmark prices, with the premium of Brent crude over Dubai crude reaching its highest level since July [1] Group 2: Industry Outlook - According to a report from Everbright Securities, significant upstream capital expenditure in China is expected to ensure growth in upstream production and reserves, benefiting oil service companies [1] - The "Three Oil Giants" are actively responding to the Belt and Road Initiative, with their overseas business expansion gradually deepening, allowing subsidiary engineering companies to leverage the advantages of their parent companies and seize new opportunities abroad, likely leading to sustained breakthroughs in overseas business development [1]

Core Viewpoint - Oil prices continue to rise due to geopolitical tensions surrounding major oil-producing countries like Iran, overshadowing the potential increase in Venezuelan oil supply [1][4]. Group 1: Oil Price Movements - West Texas Intermediate (WTI) crude oil for February delivery increased by $1.65, or 2.77%, closing at $61.15 per barrel [1][4]. - The geopolitical factors are leading the oil market to establish a price protection mechanism [1]. Group 2: Geopolitical Risks - The unrest in Iran, a major OPEC oil producer, is contributing to a geopolitical risk premium of approximately $3-4 per barrel in oil prices [6]. - U.S. President Trump announced that any country trading with Iran would face a 25% tariff on all business dealings with the U.S. [5]. Group 3: Venezuelan Oil Supply - The market is also responding to the potential additional oil supply from Venezuela, which is expected to resume exports [3][7]. - Following the forced removal of Venezuelan President Maduro by U.S. military, Trump indicated that the Venezuelan government is prepared to transfer up to 50 million barrels of oil under Western sanctions to the U.S. [8].

Group 1 - The core viewpoint of the article indicates that there is an increasing oversupply of Dubai crude oil, leading to a weakening of its forward curve [1][2] - The price differential for January and February contracts reached negative $2 per barrel, indicating a bearish outlook in the futures market [1][2] - Increased oil production has raised concerns about global oil supply oversupply, negatively impacting the prices of major benchmark crude oil futures, with Brent crude nearing $50 per barrel [1][2] Group 2 - The International Energy Agency (IEA) predicts a significant oversupply of oil by 2026 [1][2]

Group 1 - The core viewpoint of the articles highlights the increasing demand for oil from China, which is driving up tanker freight rates, while the attractiveness of U.S. crude oil to Asian buyers is gradually declining [1][4] - Chinese refining companies are rapidly placing orders for crude oil to utilize government-import quotas before the end of the year, leading to a higher utilization rate of Very Large Crude Carriers (VLCCs) [1] - The daily rental rate for VLCCs on the U.S. to China route has exceeded $70,000, which, although lower than the $90,000 rate for the Middle East to China route, results in significantly higher overall transportation costs due to longer shipping times [1] Group 2 - The "arbitrage trade" from the U.S. to Asia has become a notable feature in the spot market, although this trend may not be sustainable in the long term [1] - As OPEC gradually eases production quotas, crude oil shipping volumes in the region east of the Suez Canal are increasing, with shipowners optimistic about the market outlook [1] - There are signs of tightening supply in the U.S. domestic crude oil market, with government data indicating that crude oil inventories have decreased for two consecutive weeks, reaching the lowest level since January [4]

Core Insights - The international crude oil market is experiencing a rare reversal in its pricing structure due to expectations of oversupply and geopolitical factors [1] - Brent crude futures prices fell below Dubai crude by 3 cents per barrel, marking the first negative spread since April of this year [1] - This price inversion indicates significant changes in the supply-demand fundamentals in the key European and Asian markets [1] Supply and Demand Dynamics - The primary factor leading to the weakening of Brent prices is the market's pessimistic outlook on future supply [1] - Traders expect that both OPEC+ and non-OPEC oil-producing countries will increase production, resulting in an oversupply situation in the coming months [1] - This expectation has not only depressed the forward prices of Brent futures but also weakened the inter-month price spread, which typically signals ample short-term supply and a bearish market sentiment [1] Geopolitical Influences - Demand for Middle Eastern crude has been unexpectedly boosted by geopolitical factors [1] - Reports indicate that U.S. President Trump is pressuring India regarding the procurement of Russian oil, leading Indian refiners to seek alternative supplies from the Middle East [1] - As most crude oil exported from the Persian Gulf is priced based on Dubai crude, this additional demand has provided stronger support for Dubai prices compared to Brent, ultimately driving the reversal in their price spread [1]

Group 1 - The core viewpoint is that due to U.S. President Trump's actions against Russian oil supplies and expectations of an oil surplus later this year, the global benchmark Brent crude oil price is unusually lower than Middle Eastern oil prices [1][4] - Brent crude futures are trading at a discount of 3 cents per barrel compared to Dubai crude for the first time since April [1] - Traders anticipate a significant influx of oil in the coming months as both OPEC+ and non-OPEC countries are increasing oil production, which is putting pressure on Brent futures [4] Group 2 - The increase in oil production is weakening the time spread, an indicator of market health [4] - Demand for Middle Eastern crude has seen a temporary boost due to a buying spree from Indian refiners, influenced by pressure from Trump regarding India's purchases of Russian oil [4]

Group 1 - The core viewpoint of the article highlights the unusual situation where Brent crude oil prices have fallen below Middle Eastern oil prices due to Trump's actions against Russian oil supply and an anticipated oversupply later this year [1] - Brent crude futures are trading at a discount of 3 cents per barrel relative to Dubai crude, marking the first time since April that this price differential has turned negative [1] - The increase in production by OPEC+ and non-member countries is expected to lead to an oversupply in the oil market in the coming months, putting pressure on Brent crude futures and weakening the time spread, which is an indicator of market health [1] Group 2 - The demand for Middle Eastern crude has been boosted by a brief surge in purchases from Indian refiners, prompted by Trump's threats regarding India's purchase of Russian oil [1]