Since the beginning of this year, the international crude oil market has been on an upward trajectory, resulting in a remarkable performance by oil-themed fundsThe latest reports indicate that the ICE Brent Crude oil has recently surpassed $81 per barrel, marking an increase of approximately 9% since the year beganThis surge has also positively impacted relevant stocks, such as Baker Hughes and Chevron, both of which have witnessed over a 10% rise, thereby lifting oil funds collectivelyThe S&P Oil & Gas ETF has seen a year-to-date increase of around 25%.

The Chinese market reflects a similar trendToday, the CSI S&P Oil & Gas ETF managed to rise over 3%, with an impressive year-to-date gain of nearly 27%, making it the top performer among all ETFs in the marketWhen examining the longer timeframe, the ETF’s on-market price has rebounded more than 30% since its low point in December last year.

Recently, China has announced a price increase for refined oil products

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Effective from January 16, 2025, the price of gasoline and diesel will go up by 340 yuan and 325 yuan per ton, respectivelyThese adjustments come in response to changes in the international oil market.

In discussing the sustained strength of international oil prices, it is not a recent phenomenonSince late December last year, the international crude oil market has reversed the stagnation it experienced over the previous three months, entering into a rebound phase.

According to data from Wind, as of January 16, both ICE Brent Crude and NYMEX WTI Crude have each increased by over 10% in the past monthToday, ICE Brent surged by 0.4%, reaching $81.62 per barrel, while NYMEX WTI rose by 0.5%, settling at $78.22 per barrel.

The rebound in international crude oil prices has contributed to rising oil prices in China

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As indicated in the announcement on the evening of January 16, due to fluctuations in international market oil prices, and following current refined oil pricing mechanisms, gasoline and diesel prices in China will rise accordinglyThe adjustment translates to an increase of 0.26 yuan per liter for 92# gasoline and 0.28 yuan per liter for 0# diesel.

Price monitoring centers show that during the latest refined oil pricing cycle (January 2–15), international oil prices have significantly surged, leading to a peak unseen in the last six monthsThis rise can primarily be attributed to new rounds of sanctions from the United States on Russian oil production and exports, which are expected to tighten oil supplyThe market anticipates a potential reduction in supply by 900,000 to 1,000,000 barrels per day, along with significant disruptions to oil transportation

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Additionally, the demand for heating oil during winter and unexpected drops in oil inventory have further aggravated the tight supply expectationsBy the week ending January 10, U.Scommercial crude oil inventories have declined for eight consecutive weeks, landing at their lowest point since April 2022.

Moreover, the price monitoring center predicts robust short-term support for international oil pricesThe current geopolitical and economic climate carries significant uncertainty, especially in regions like the Middle East, which continues to pose risks that will add volatility to oil markets and prices.

Performance of oil and gas ETFs has also rocketed, with recent data showing a 30% surge in the value of related energy stocks against the backdrop of rising oil pricesCompanies like Baker Hughes and Chevron have both gained over 10% year-to-date, which has correspondingly elevated oil fund values.

Data from Wind indicates that today, the CSI S&P Oil & Gas ETF rose nearly 2%, reflecting a remarkable 25% increase year-to-date, leading all ETFs in the market

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If we review the longer timeframe, this particular ETF has surged more than 30% since its low in December, which far exceeds the performance of the benchmark index—adjusted for valuation and currency shifts—which reaped around 17%. The current premium rate stands at an impressive 15%.

Following closely, the Vanguard S&P Oil & Gas ETF has also rebounded nearly 30% since its low in December, with a current premium rate of about 15%. Other oil-related products such as HuaBao Oil and Gas LOF, GuangFa Petroleum LOF, and the Jiahua Crude Oil LOF have all shown increases exceeding 10%.

When considering the appreciation of fund net values, oil-themed funds have dominated the top ten performances in this year’s Qualified Domestic Institutional Investor (QDII) rankingsAs of January 16, available data indicates that funds like Bosera S&P Oil & Gas, Jiahua S&P Oil & Gas, and Vanguard S&P Oil & Gas experienced increases of 10.65%, 9.97%, and 9.96% respectively, significantly contrasting with last year when technology-themed funds were the dominant players on performance charts.

A short-term optimistic and a mid-term cautious perspective is being adopted regarding future oil market dynamics

The recent strong performance of crude oil has surpassed expectations of many investors, raising questions about what is currently being traded in the market and where international crude oil prices are headed in the near future.

Yuyang, the fund manager for HuaBao Oil & Gas, suggests that we are currently in a new cycle of energy transitionOil and gas companies are exercising caution regarding their future capital expenditures, with a long-term supply shortage keeping oil prices elevatedHe asserts that traditional energy continues to play a crucial role in our economic lives.

In this context of a global energy transition, the prolonged high prices of traditional energy and insufficient investments in upstream enterprises will persist until renewable energy can conventionally match and eventually replace old energy sources

Looking ahead, a detailed analysis framework from Vanguard Fund suggests examining U.Soil inventory trends in the short term while focusing on supply and demand dynamics in the medium term, with projections extending into 2025 for crude oil market trends.

In the immediate term, a dip in U.Scommercial oil inventories signals a favorable outlook for the marketThe current unexpected acceleration in U.Soil stock reductions supports temporary price recoveriesRecent increases in downstream demand, alongside a marginal rise in U.Srefinery processing volumes, have contributed to stabilizing inventory reductionsHowever, the seasonal expectation indicates that the first quarter is typically a demand dip, leading to lower replenishment intentions.

Looking at the mid-term, the sustaining factors behind oil price fluctuations will primarily stem from supply and demand interactions