With the recovery of crude oil prices, global oil giant Saudi Aramco also handed in a bright report card in the first quarter.
Saudi Aramco made $150 billion in the first quarter
On May 4, Saudi Aramco, the state-owned oil company, announced its latest first-quarter earnings report.
The data shows that in the first quarter of this year, Saudi Aramco's net profit increased by 30%, that is, from $16.6 billion last year to $21.7 billion. That is to say, in the first three months of this year, Saudi Aramco made a net profit of $21.7 billion, about 151.2 billion yuan, equivalent to a net profit of nearly 1.7 billion yuan a day, and a net profit of nearly 20,000 yuan per second, which can be called a "printing machine".
In fact, despite the decline in Saudi Aramco's oil production in February and March this year, Saudi Aramco's first-quarter report card also exceeded market expectations of $17.24 billion, close to the level of $22.2 billion in the first quarter of 2019, the year before the oil price plunge.
It is also widely seen as a sign of the company's continued recovery from last year's plunge in crude oil markets, which cut the company's full-year net profit in half.
Saudi Aramco reported in the first quarter of last year that the company's net profit fell by 25% in the first quarter of 2020 due to the impact of the impact of the decline in global oil demand.
In addition, the data also shows that in the first quarter of this year, Aramco's cash flow was $18.3 billion, up from $15 billion in the same period last year.
Benefited from a sharp rebound in national oil prices
For a strong recovery in first-quarter results, Saudi Aramco said in its earnings report that profit growth was mainly driven by a strong oil market, as well as higher refining and chemical margins.
As Saudi Aramco called it, 2020 was "the most challenging year" in its history. Last year, oil demand plummeted as a result of the imposition of anti-epidemic lockdown measures around the world, triggering a sharp drop in energy prices, which fell by more than one-fifth in 2020.
As a result, Saudi Aramco, the world's largest oil exporter, saw its net profit fall 44.4 percent year-on-year to 183.76 billion riyals ($49 billion) in the fiscal year ended December 31.
As the economy gradually recovered from the impact of the epidemic, since November last year, the international benchmark Brent crude oil futures price has risen by nearly 70%, and the US WTI crude oil futures have also risen by about 65%.
Looking at current crude oil prices, it has returned to the 2019 price range, oscillating in a narrow range around $60, and Brent crude oil futures prices are about twice as high as in the same period last year. Amin Nasser, president and CEO of Saudi Aramco, said at the company's news conference on Tuesday: "The momentum provided by the global economic recovery has strengthened the energy market."
"Some headwinds remain," he added, but said: "Given the positive signs of energy demand in 2021, we have more reason to be optimistic that good times are coming."
OPEC+ and a coalition of major oil producers, including Russia, decided last month to maintain a previously approved action plan to further ease production limits from May.
In the first quarter of 2021, Saudi Aramco produced an average of 11.5 million barrels per day, including 8.6 million barrels per day of crude oil.
On the other hand, the company has announced a large number of asset sales in the past few months. The most recent was when Saudi Crown Prince Salman announced in late April that he would sell a 1 percent stake in Aramco to a "leading global energy company."
In mid-April, the company signed an agreement to sell 49 percent of its pipeline to EIG Global Energy Partners, a U.S.-led consortium.
In fact, as global oil demand increases and oil prices rise, big oil companies are back on the back foot in 2020, with Royal Dutch Shell, Exxon Mobil and Vitol all expected to turn profitable in the first quarter of 2021, giving analysts hope that the oil and gas industry will perform strongly this year.
The performance of the domestic three barrels of oil rebounded sharply in the first quarter
Not only foreign, but also the continuous rise in international oil prices since the beginning of this year has also caused the performance of the domestic "three barrels of oil" in the first quarter to rebound sharply compared with the same period last year.
PetroChina's first quarterly report for 2021 disclosed on April 29 showed that the operating income was 551.923 billion yuan, an increase of 8.4% year-on-year; the net profit attributable to the shareholders of the parent company was 27.721 billion yuan, an increase of 43.951 billion yuan compared with the net loss of 16.230 billion yuan in the same period of the previous year, the best level in the same period in the past seven years.
On April 28, Sinopec released the first quarter of 2021 performance report, the net profit attributable to the company's shareholders reached 18.543 billion yuan, and the operating performance of the quarter turned a loss year-on-year, which was better than the same period in 2019.
CNOOC's first-quarter key operating indicators released on April 22 showed that it achieved total net production of 137.7 million barrels of oil equivalent during the reporting period, up 4.7% year-on-year. The average realized oil price was $59.07/barrel, up 20.5% year-on-year. Driven by higher international oil prices and higher sales volumes, CNOOC's unaudited oil and gas sales revenue reached about RMB48.34 billion, up 21.0% year-on-year.
Crude oil fund performance led the way during the year
Despite recent price volatility, crude oil remains one of the best performing commodities on the market this year. In this context, the oil and gas QDII fund, which once performed at the bottom last year, ushered in a bottoming out rebound this year.
According to the data, as of the end of last year, WTI crude oil closed down 48.42 US dollars / barrel from 61.6 US dollars / barrel at the beginning of last year, an annual decline of 21%, and Brent crude oil closed down 51.72 US dollars / barrel from 66.41 US dollars / barrel at the beginning of the year, an annual decline of 22%.
Dragged down by this, the overall performance of oil and gas QDII in the whole year was at the bottom, 9 of the top ten in the yield were crude oil theme funds or products with commodities such as crude oil allocation, and 3 oil and gas QDII had the largest annual net value decline of even more than 50%.
However, since 2021, the performance of such funds has ushered in a bright rebound, soaring from the bottom to the leading position. Wind data shows that as of April 30, the product with the highest increase in the current year in the QDII fund has reached a yearly yield of 40.09%. In addition, the performance of the remaining crude oil-themed QDII products is not inferior, and the vast majority of crude oil and energy QDII funds have a yield of more than 20%.
International investment banks continue to be bullish on oil prices
Just this past April, the crude oil market experienced a process from oscillation to strength, Brent crude oil has always oscillated at $61-68 / barrel, but with the continuation of the oscillation time, the market correction has also entered the end.
Brent crude oil hit $68/b twice, the first time unsuccessfully, adjusted to $65/b and then launched another charge, after which the price rose sharply under the news that the UAE was about to cut crude oil production.
The recent market reports of Goldman Sachs and Morgan are extremely optimistic about oil prices in the third quarter, and the core views are almost the same, the main logic of the bullish is that in the third quarter, under the popularity and promotion of vaccines, market demand will recover rapidly, while at the same time, the growth of the supply side is slow, the growth of demand will lead to global supply becoming more tight to a certain extent, and global crude oil inventories will also usher in a wave of rapid destocking after the second quarter, including crude oil, copper and other commodities will usher in this process. Once again, the world will enter a commodity bull market.
Goldman Sachs expects brent prices to reach $80/b/b in the third quarter, WTI to reach $77/b, and copper to exceed $11,000/ton in the first quarter of next year. Morgan's price forecasts, while not as aggressive as Goldman Sachs's, have also maintained a steady upward trend over the next year.
Morgan also said that as the economy reopens in the second and third quarters, the world will shift from buying metal-intensive goods to buying oil-intensive services, such as driving out to eat, visit friends and travel. The United States will grow faster than many other countries this year and will be one of the main drivers of the continued recovery of the global economy.
Europe will join the United States in May and June as it embarks on the road to recovery. Overall, rising demand means that even if OPEC+ brings 2 million bpd of production back to market, inventories will continue to decline. The U.S. demand boost in the second quarter should have brought OECD inventories to a five-year average in April, one month ahead of previous expectations.
UBS also said that OPEC+ still has full control of the oil market, saying it is only gradually withdrawing production cuts, taking a cautious approach, and expects Brent crude to hit $75 / barrel in the second half of the year.
The investment bank analyst believes that global oil consumption will rise from about 94 million barrels per day to more than 99 million barrels per day in the second half of the year, and the acceleration of vaccination and the reduction of restrictions will benefit the demand.
UBS believes that the market has been in severe supply and demand this year, and the decline in inventories supports this view, "We reiterate our recommendation to do more Brent crude oil for investors with higher risk tolerance". However, if the increase in the number of people infected with the new crown virus leads to the extension of restrictions, which in turn puts pressure on crude oil demand, oil prices may fall.