Zhixin Finance learned that gtja released a research report stating that last week, crude oil prices continued to remain strong and broke through previous resistance levels. On the demand side, the EIA report shows that the demand for refined oil has improved marginally compared to the previous period, and crude oil has performed better than expected. The team maintains its view that the Q3 oil price will remain above 85 US dollars/barrel, with a maximum limit of 88-92 US dollars/barrel. It is expected that the balance sheet will weaken after Q4, and the overall situation in the second half of the year will be rising and falling. Crude oil prices continue to remain strong, and the market keeps a high level of attention to the dividend sector. We recommend leading enterprises in the oil and chemical industry with cost competitive advantage and low-cost leading chemical enterprises with the expectation of improved demand of chemical products.

①Last week, crude oil prices continued to remain strong and broke through previous resistance levels. On the demand side, the EIA report shows that the demand for refined oil has improved marginally compared to the previous period, and crude oil has performed better than expected. However, the landing of Hurricane Berier will affect the refinery and is expected to reduce the refinery load next week; demand will be disrupted. From a geopolitical perspective, Hamas has made concessions on the ceasefire agreement requirements, and the current obstacle is that Hamas requires written commitments from Qatar and other countries. However, on the other hand, the conflict between Israel and Lebanon is still escalating; pay attention to whether Israel will upgrade the conflict in mid-to-late July. The possibility of Iran's next move is still the main concern of the market. At the same time, the elected reformist politician is the new president of Iran, advocating a pro-Western policy, which may have an impact on future geopolitical situation. However, the current main person in charge is still Khamenei, and the short-term situation is not expected to change significantly. At the macro level, after the release of US non-farm data in June, the US market further priced in the slowdown in the labor market and the increase in the probability of interest rate cuts in September; the release of June CPI data next week and Powell's congressional testimony will be an important focus of the market. Overall, gtja maintains its view that the Q3 oil price will remain above 85 US dollars/barrel, with a maximum limit of 88-92 US dollars/barrel. It is expected that the balance sheet will weaken after Q4, and the overall situation in the second half of the year will be rising and falling.

②The market view: Crude oil prices continue to remain strong, and the market keeps a high level of attention to the dividend sector. gtja believes that upstream central oil companies such as CNOOC and PetroChina are still the focus of recent market configuration and attention. Compared with overseas companies, there is still room for valuation repair in Hong Kong stocks. On the other hand, in the long term, the prosperity of offshore oil and gas mining services will continue to improve in the next 2-3 years; long-term recommendation for offshore oil and gas mining. At the same time, the market is concerned about the supply-side production cuts to support the ton profit of the polyester filament sector. It is expected that the natural gas marketization reform will continue to be pushed forward, and gtja believes that the gross profit difference will remain relatively stable, and Kunlun Energy with increased consumption is undervalued. In the long term, gtja expects the profitability of chemical companies. We recommend leading enterprises in the oil and chemical industry with cost competitive advantage and low-cost leading chemical enterprises, taking into account the expectation of improved demand for chemical products which was suppressed before due to the historical low price difference and the future expansion of production capacity. We recommend state-owned engineering and construction companies that will benefit in the long term from the improvement of capital expenditure in the refining and chemical industry and the new materials sector.

Risk reminder: European and American replenishment demand is lower than expected, and overseas soft landing expectations may swing back. Geopolitics will disturb the supply side.