Shares of Chinese oil companies gained in morning trade, fueled by the rise in crude oil prices amid worries that Russia’s invasion of Ukraine will result in severe disruptions to global supply.
Hong Kong-listed PetroChina Co.
rose as much as 2.4% in early trade before paring gains, and was last 1.7% higher at HK$4.31. The energy major’s one-week gains stand at 4.9%, taking the stock to its highest level since September 2019.
The Hang Seng Mainland Oil & Gas Index, which tracks Chinese crude oil and natural gas-related companies listed in Hong Kong, gained 2.4%, taking one-week gains to 2.3%. The index is at its highest level since February 2020.
the global oil benchmark, has risen to $116.32 a barrel from around $95 a barrel before Russia invaded Ukraine.
Chinese national oil companies’ cash-flow generation is set to be enhanced by higher oil prices and production this year, Fitch Ratings said. It added that a likely recovery of national oil companies’ fixed-asset investment should also boost production growth and boost upside potential for earnings.
While overall upstream earnings are set to rise, national oil companies’ losses from natural gas imports likely started widening in the fourth quarter of 2021 amid higher international gas prices and the difficulties they face in passing through these costs in full, Fitch Ratings added.
Also, companies with significant operations in oil refining, rather than oil production, could suffer as they would face higher input costs. Fitch Ratings expects refining margins to come under pressure in the first half.