00386 Overview

PETROCHINA Overview: The stock is rated as "Outperform" with a target price adjustment from HKD10 to HKD9.6, facing short selling pressure of $68.28M and a ratio of 36.119%.

CNOOC Overview: Also rated "Outperform," CNOOC's target price has been adjusted from HKD23 to HKD22.8, with short selling amounting to $144.26M and a ratio of 17.576%.

SINOPEC CORP Overview: SINOPEC CORP has a slight decline of -1.493% in stock price, rated "Outperform" with a target price increase from HKD4.4 to HKD5.2, and short selling at $104.04M with a ratio of 27.763%.

Market Context: BOCI anticipates that an event in Venezuela may lead to a short-term decline in oil prices, which could result in selling pressure for PETROCHINA.

Venezuela's Impact on Oil Prices: Recent developments in Venezuela are contributing to uncertainty in the global oil market, leading to an 8% decline in oil prices in Q4 2025, according to CLSA.

Revised Oil Price Forecast: CLSA has lowered its 2026 oil price forecast from $70 to $65 per barrel and adjusted earnings estimates for related companies down by 1-12% for FY2025-27.

Geopolitical Risks and Gold Prices: The situation in Venezuela is raising geopolitical risks, which may support gold prices while intensifying the oversupply of oil.

Investment Focus on Chinese Oil Stocks: CLSA highlights major Chinese oil stocks for investment, including PETROCHINA, CNOOC, and SINOPEC, noting significant short selling activity in these companies.

Restructuring Approval: China's State Council has approved the restructuring of Sinopec Group and China National Aviation Fuel Group (CNAF), highlighting the significance of state-owned enterprise restructuring in China's "15th Five-Year Plan."

Impact on SINOPEC: JPMorgan does not anticipate any direct impact on SINOPEC CORP's earnings or cash flow from the restructuring, maintaining a Neutral rating with a target price of HKD4.

Sinopec Group Restructuring: Sinopec Group is restructuring with China National Aviation Fuel (CNAF) Group to enhance its aviation fuel and sustainable aviation fuel development, which is expected to benefit its refining and sales business amid declining gasoline and diesel demand in China.

Citi Research Insights: Citi Research has set a target price of $5.2 for SINOPEC CORP, rating it as a Buy, while noting the potential synergies between SINOPEC's aviation fuel business and CNAF Group, although the specifics of the restructuring remain unclear.

Market Positioning: Despite the restructuring, Citi Research's top pick in China's oil and gas sector is PETROCHINA, which is viewed as having a stronger dividend capacity in a low oil price environment.

Short Selling Data: As of January 8, 2026, SINOPEC CORP has a short selling value of $398.97M with a ratio of 37.938%, indicating significant market speculation against the stock.

Venezuela's Oil Production Outlook: JPMorgan predicts that Venezuela's oil production could drop by 50% following Nicolas Maduro's departure, but may rebound to 1.4 million barrels per day within two years and reach 2.5 million barrels per day in a decade if stability is restored.

Impact on Chinese Oil Companies: Venezuelan crude, which constituted 4% of China's oil imports in 2025, is primarily processed by small refineries, meaning the impact of losing this supply on major companies like SINOPEC and PETROCHINA will be limited due to US sanctions.

JPMorgan's Stock Ratings: The firm is optimistic about PETROCHINA due to its successful diversification into natural gas, while SINOPEC is rated Neutral due to weak short-term earnings prospects.

Market Conditions for Oil-Based Stocks: Lower oil prices and favorable interest rates may accelerate the recovery of oil-based chemical stocks, with HLGF receiving an Overweight rating from JPMorgan.

China's Fuel Export Quotas: China is expected to finalize its fuel export quotas within the next two months, with a significant increase anticipated for 2026 to address declining domestic fuel demand and combat deflation.

Impact on SINOPEC: Morgan Stanley predicts that SINOPEC CORP will see improved earnings in 2026 and achieve the highest dividend yield among major Chinese oil companies, maintaining an Overweight rating on the stock.

PetroChina's Gas Prices: PETROCHINA may experience a decrease in wholesale natural gas prices in March, as import costs are expected to drop significantly when the 2026/27 seasonal prices are finalized.

Market Context: The report highlights the broader implications of these changes for the Chinese oil market, particularly in relation to refining margins and global market conditions.