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Although the European Petroleum Company’s financial report, threatened by the European debt crisis, was slightly inferior, it remained bullish compared with the same period of last year. Shell realized a profit of US$4.21 billion in the second quarter, an increase of 34% year-on-year. Total's second-quarter profit increased by 72%.
However, it should also be noted that the sharp increase in the second-quarter profit of international oil companies is based on the sharp drop in oil prices caused by the financial crisis last year. The renewed growth of profits of oil companies is a reflection of the global economy’s gloom away from the financial crisis.
Oil price fluctuations: Well-being? Woe?
In response to rising performance, Exxon Mobil said at the press conference that it mainly benefited from higher crude oil prices, higher output, lower capital expenditures, and growth in chemical and refining operations. Chevron believes that the growth in performance is mainly attributable to the overall increase in the prices of refined products such as crude oil, natural gas and jet fuel. It is not difficult to see that international oil prices are one of the most fundamental factors affecting the oil and chemical industry.
According to statistics, the overall increase in international oil prices in the first half of the year was relatively large. In April, the spot price of WTI was the highest since the financial crisis, reaching US$83.58 per barrel. Since then, due to the spread of Western European sovereign debt crisis, and the impact of world economic growth as expected and other factors, oil prices have been declining, the average price for six months was US$77.16 per barrel, up 54.6% year-on-year.
Does this mean that the higher the oil price, the better the performance of the oil company? Liu Lin, professor at the China University of Petroleum (Beijing), believes: "If the cost of product acquisition remains the same, of course, the higher the price of oil, the better the performance of oil companies. But in the long run, the relationship between corporate performance and oil prices and acquisition costs is not simply linear. If some of the rising costs cannot be passed on, high oil prices will lead to shrinking demand, leading to 'Supply Shock' (supply shocks) and the result will be a drop in prices. Oil prices higher than $100 will not be favorable to oil companies for a long time. ."
According to industry analysts, US$60 to US$80 per barrel is a sustainable oil price level acceptable to both manufacturers and consumers.
Global Economy: Recovery? Double bottom?
Obviously, the growth of oil companies' performance has boosted people's confidence in the global economic recovery.
As the world’s second largest crude oil consuming country and the largest factor in the current global economic increase, China’s crude oil production in the first half of the year increased by 5.3% year-on-year, natural gas production increased by 10.8% year-on-year, and crude oil processing volume increased by 17.9% year-on-year. To some extent, it reflects the strong demand for energy in China.
However, the US Department of Commerce announced data on July 30th that due to weak growth in personal consumer spending, the US economy grew at an annual rate of 2.4% in the second quarter, which was lower than the revised 3.7% in the first quarter, indicating that the US economic growth continued to slow. At the same time, data from China shows that the government's regulation of bank credit and real estate speculation has had an impact on the economy, and the economic growth rate has begun to slow in the second quarter. The slowdown in the economic growth of the two major energy-consuming countries has plagued the oil market that has just hit the flames.
Does the legendary "double bottom" appear?
In response, Liu Lin said: "The global economy is still recovering from the crisis. In Europe, America and Japan, whether it is the government or the enterprises or the family, the overdrafts of the current and future economic resources are very powerful. Just like an old man. As soon as the disease has begun to recover, there may be no new ones found. Therefore, there is a possibility of a second bottom, and the economic recovery cannot be short-term."
Refining capacity: excess? shortage?
The oil and gas industry has entered the era of low profit. This means that the domestic and international refining business is likely to become short of oil companies under the pressure of high oil prices and high costs.
According to the financial report, the refining, marketing and chemicals business of Chevron in the second quarter of the United States increased significantly, mainly due to the closure of some refineries and projects, increased refining profit margins, and increased downstream profits.
On the other hand, the shortage of oil resources has become a major challenge for China's oil refining industry. If the price of oil continues to rise, the refining business will experience greater operating pressure. With the increase in energy-saving and emission-reduction standards for refineries, increased investment in product upgrades, and increased competition for diversification, the challenges faced by domestic refinery companies are the lag in backward production capacity and the shortage of high-quality products.
How do domestic refining companies meet these challenges? “Refining companies need to benefit from the transformation of development methods. What is important is to make full use of technological progress and management optimization. Of course, it is necessary to continuously improve the upstream and downstream integration, intensive management, and industrial concentration levels of the refining and refining sector. "Liu Lin said," Major international oil companies like Exxon Mobil are integrated upstream and downstream operations, from exploration and extraction, to oil refining, transportation, and sales. Each link can be based on market demand and Sudden adjustments are made flexibly, which effectively reduces the company's costs and risks."
In the second quarter ended June 30, the “oil spill†clouded over the Gulf of Mexico, and the performance of major oil companies headquartered in the United States went all the way. ExxonMobil’s net profit was US$7.56 billion, an increase of 91% over the same period last year. Chevron’s second-quarter net profit rose more than twice year-on-year. ConocoPhillips’ second-quarter net profit increased nearly 4 times year-on-year, totaling US$4.2 billion.