The oil services industry recovered strongly

Since October, crude oil prices have mainly
risen.
Especially in the first week of October, the price of light crude oil in the United States rose by 16.
48%, and the price of Brent crude oil rose by 15.
05%, and recorded the largest weekly increase in seven months
.
On October 17, U.
S.
light crude oil November futures closed at $85.
46 / barrel, and Brent crude oil December futures closed at $91.
62 / barrel, up 7.
51% and 4.
16%
in half a month.
Affected by the rise in oil prices and the acceleration of the construction of domestic related industrial projects, the oil service industry ushered in a strong recovery
.

From the perspective of the international crude oil market, on October 5, local time, OPEC+ held a ministerial meeting and announced a significant reduction in production by 2 million barrels per day
from November.
This cut is huge, the largest since the 2020 pandemic, accounting for 2%
of total global demand.
Affected by this, the price of light crude oil in the United States rebounded rapidly, soaring 22%
in just 9 trading days.

Against this backdrop, the U.
S.
government said it would put another 10 million barrels of crude reserves on the market in November to cool
the crude oil market.
However, OPEC+, led by Saudi Arabia, has hard oil resources and is trying to protect its own interests
.
At present, the average deficit line of oil producers in the Middle East is about 80 US dollars / barrel, and it is expected that a sharp decline in oil prices in the short term is unlikely
.

According to a report released by Morgan Stanley, Morgan Stanley raised its Brent crude oil forecast price for the first quarter of 2023 from $95/barrel to $100/b
with the OPEC+ organization's sharp production cuts and the European Union's crude embargo on Russia.

In the context of high oil prices, the acceleration of the construction of related industrial projects in China will also promote the accelerated development of
the oil service industry.

On September 28, the national "14th Five-Year Plan" oil and gas development plan key project - the West-to-East Gas Pipeline Project of the fourth line of natural gas pipeline officially started
.
The project starts from Irkeshtan, Wucha County, Xinjiang, and passes through Lunan and Turpan to Zhongwei in Ningxia, with a total length of about 3,340 kilometers
.

In addition, the state will speed up
the construction of oil and gas pipeline network projects.
Song Wen, deputy director of the Planning Department of the National Energy Administration, recently publicly stated that by 2025, the scale of the national oil and gas pipeline network will reach about 210,000 kilometers, and it is expected that investment in key energy areas during the "14th Five-Year Plan" period will increase by more than
20% compared with the "13th Five-Year Plan".
The implementation of these new projects will drive the demand for oil equipment and other products to continue to grow
.

In addition, domestic energy companies also plan to increase domestic oil and gas exploration and development
.
According to the data, in 2022, the capital plan expenditure of China's petroleum exploration and production sector will be 181.
2 billion yuan, accounting for 74.
88%; Sinopec's capital expenditure on petroleum exploration and production was RMB81.
5 billion, accounting for 41.
2% of the total.
CNOOC's capital plan expenditure on oil exploration and production is more than 72 billion yuan, accounting for about
80%.

For a long time, the trend of international oil prices has greatly affected the capital expenditure plans
of oil companies.
Often when oil prices are high, upstream companies tend to increase capital expenditure to produce more crude oil; When oil prices fall, upstream companies reduce capital expenditures to cope with the cold industry winter
.
This also determines that the oil service industry is an industry
with a long cycle.

Xie Nan, an analyst at Zhongtai Securities, pointed out in the research report that the impact of changes in oil prices on the performance of oil services has a transmission process, following the principle of
"oil price - oil and gas company performance - oil and gas capital expenditure - oil service orders - oil service performance".
The performance of oil services reflects a lagging indicator
.
In 2021, although international oil prices rebounded, the recovery of the oil service market was relatively slow
.
In 2022, the demand for refined oil products will recover, international oil prices will rise all the way, global energy prices will remain at a high level, domestic and foreign oil and gas exploitation activities will gradually be active, and a new round of economic cycle in the oil service industry has begun
.