There is great resistance to increasing oil production, and oil prices will find it difficult to fall in the short term.
Oil giants ExxonMobil and Chevron are in a dilemma as Biden applies pressure.
Biden wants U.S. oil companies to increase production, but two powerful forces are working against the president’s calls.
On one side, Wall Street hopes that oil groups will spread billions of dollars in profits to investors instead of spending the money on new supply; on the other side, the International Energy Agency (IEA) warns that oil demand will decline by the middle of the next decade. This weakens the oil majors’ case for massive investment.
The tensions were underlined this past week when Exxon Mobil and Chevron each reported earnings showing a combined record of net profits for the past two quarters. Compared with pre-pandemic plans, the US oil supermajors have reduced investment by about 30%.
The IEA said for the first time that it saw “clear” signs that oil demand will peak under current government policies. Crude oil demand is likely to grow at less than 1% per year before peaking in 2035.
Chevron CEO Wirth said investors don’t want them to invest in part because of U.S. and European policies and rhetoric aimed at weaning economies off fossil fuels to combat climate change.
Goldman Sachs said that “structural supply underinvestment” across the oil industry could support crude prices above $100 for some time, even as the economy slows.
Textile industry continues to be under pressure
Since 2022, affected by factors such as the slowdown in world economic recovery and frequent domestic epidemics, the domestic and external market demand for textiles and clothing has been overall weaker than last year. Superimposed on the impact of high fluctuations in raw material prices, the overall growth rate of production and sales in the textile industry has shown Slow down.
According to data from the National Bureau of Statistics, in the first three quarters of 2022, the national textile industry and chemical fiber industry capacity utilization rates were 77.6% and 83.3% respectively, both down by about 2 percentage points from the same period last year, but still higher than the 75.5% of the national industry in the same period. Capacity utilization level. The industrial added value of textile enterprises above designated size nationwide decreased by 0.4% year-on-year, operating income increased by 3.1% year-on-year, and total profits decreased by 23.6% year-on-year.
From the perspective of the entire industry chain, the mid- and downstream printing and dyeing, filament weaving, clothing and other sub-industries are generally operating well, with production and sales indicators achieving positive growth; although the production and sales scale of the home textile industry has shrunk, profitability is stable; the upstream chemical fiber and cotton spinning industries are affected by raw materials Affected by factors such as high prices and difficulty in transmitting costs along the industrial chain, profitability pressure is more prominent.
Overall, the textile industry will be under great pressure to maintain stable operation in 2023. In the third quarter, leading listed polyester companies all experienced significant performance declines. Before the end of the year, demand is expected to be difficult to rebound significantly. The contradiction between supply and demand is still huge, and raw material procurement needs to be cautious. Since October, the average production and sales of chemical fiber factories have been around 60%, and the problem of accumulated inventory still exists. Last month, after experiencing a price drop of nearly 1,000 yuan within a week, the downstream confidence was greatly affected. All industrial chain links suffered serious losses. The current price of polyester chips is 7,600 yuan/ton, while the price of 75D polyester POY is less than 7,000 yuan/ton. , the loss is about 400 yuan per ton, and flour is more expensive than bread. However, comprehensive consideration shows that the production capacity of polyester POY is significantly higher than that of polyester chips, and polyester chips are mostly used for high added value and have less fluctuations. With support from the cost side, polyester yarn may also rebound slightly.
Starting in November, leading manufacturers will continue to reduce production. If crude oil continues to remain at around US$90/barrel, it will provide certain support for prices. It will also be good news for textile factories to stabilize prices and gradually release inventory.
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