Continuous premium! Continues to rise after resumption

On March 24, several oil and gas-themed funds under Huadian Fund, Fuguo Fund, and Jiashi Fund suspended trading for one hour.

Industry insiders stated that current oil prices are at a high level, and if external conflicts persist, oil prices may fluctuate within a high range and could even rise further. Upstream sectors such as oil, coal, gas, coal chemical, and agricultural chemicals, which benefit from energy inflation and have low correlation with the global macro economy, may be worth paying attention to.

Multiple oil and gas-themed funds suspended trading

An announcement from Huadian Fund on March 24 indicated that recently, the trading price of the Huadian S&P Global Oil Index Securities Investment Fund (LOF) (on-site short name: Oil Fund LOF) in the secondary market showed significant premiums, with the trading price deviating from the net asset value on the previous valuation day. To protect investors’ interests, the fund suspended trading from the market opening on March 24 until 10:30 AM on the same day, resuming trading at 10:30 AM. During the suspension, the fund’s redemption business continued as usual. If the trading price of the fund in the secondary market does not effectively decline after the suspension on March 24, the fund has the right to apply for a temporary suspension in the market or extend the suspension time to warn the market of risks.

The S&P Oil and Gas ETF under Fuguo Fund also suspended trading for one hour today. Fuguo Fund stated that the trading price of this fund in the secondary market was significantly higher than the reference net asset value (IOPV), resulting in a large premium. Investors are hereby reminded to pay attention to the risk of premium in the secondary market trading price. To protect investors’ interests, this fund suspended trading from the market opening on March 24 until 10:30 AM on the same day.

Jiashi Fund announced that the S&P Oil and Gas ETF Jiashi also suspended trading from the market opening on March 24 until 10:30 AM on the same day, resuming trading at 10:30 AM on March 24.

Data from Wind shows that after resuming trading at 10:30 AM, the net values of the three funds continued to rise. For example, as of the midday close, the S&P Oil and Gas ETF Fuguo rose by 6.94%, with a premium rate of 33.36%; the S&P Oil and Gas ETF Jiashi rose by 5.60%, with a premium rate of 25.65%; and the Oil Fund LOF rose by 5.32%, with a premium rate of 33.64%.

Image Source: Wind

The suspension of oil and gas-themed funds due to significant premiums is not a “new” occurrence. Taking the Huadian S&P Global Oil Index Securities Investment Fund (LOF) as an example, data from Choice shows that since March, this fund has issued 16 risk premium alerts and 10 temporary suspension announcements.

The possibility of high-level fluctuations or further increases cannot be ruled out

Since March, international oil prices have risen sharply.

Jin Ye, a fund manager at Galaxy Fund, stated that according to data from the International Energy Agency (IEA), the daily crude oil transportation volume through the Strait of Hormuz in the Persian Gulf was 20 million barrels per day before the war, accounting for 20% of global daily demand. After changes in the situation in the Middle East, the navigation volume through this strait quickly decreased, and some Gulf countries, including Qatar and Kuwait, announced crude oil production cuts due to transportation issues, leading to a surge in oil prices.

Looking ahead to future oil price trends, Jin Ye believes that current oil prices are in a high phase, and if the conflict does not end, there is a possibility that oil prices may maintain high-level fluctuations or continue to rise. Even if the conflict eases in the future, due to facility destruction and the time required for transportation recovery, the low point after a decline in oil prices may still be higher than the $60 bottom position at the beginning of the year. The surge in oil prices may lead to inflation and expectations of a global economic recession, potentially putting pressure on the equity market, while upstream sectors such as oil, coal, gas, coal chemical, and agricultural chemicals that benefit from energy inflation and have low correlation with the global macro economy may be worth paying attention to.

In the long term, Ren Fei, manager of the China-Europe Cycle Preferred Fund, stated that if oil and gas are only viewed from the normal supply-demand structure, there will still be an excess in 2026. However, the development of artificial intelligence data centers will significantly increase the demand for oil and gas. This recent U.S.-Iran conflict may further advance the turning point of oil and gas prices. Within a three-year horizon, oil and gas prices are expected to reach new historical highs. However, short-term fluctuations in oil and gas prices are difficult to grasp.

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Editor: Hao Xinyu