According to Shenwan Hongyuan's research report, oil prices are expected to remain within a neutral range in 2026, with refining and polyester sectors likely to see a bottoming recovery amid supply contraction. The analysis suggests focusing on the polyester industry chain benefiting from supply-demand improvements and leading refiners gaining from policy support and capacity optimization. Key insights are as follows:

**Oil & Gas Exploration: Supply Slowdown, Oil Prices in Neutral Range** Brent crude is projected to trade between $55–70 per barrel in 2026. On the supply side, OPEC+ production growth is slowing, while non-OPEC output growth declines significantly, with shale oil output expected to peak. Demand-wise, global GDP growth is estimated at 3.1% in 2026, leading to moderated crude demand growth. Geopolitical uncertainties persist, with sanctions on risk-prone oil varieties ongoing, though market prices already partially reflect these risks. The report concludes that crude supply-demand will remain weakly balanced in 2026, with oil prices stabilizing slightly below 2025 levels but staying neutral long-term.

**Refining: Recovery Potential Amid Global Supply Tightening** Supported by China’s "anti-involution" policies and overseas refinery capacity phase-outs, refining profitability is expected to recover in 2026. While new capacity additions are tapering off, projects like "oil-to-chemicals" conversions may sustain supply pressure. Sector-wise, refined products face declining demand due to competition from EVs and LNG trucks; olefins remain oversupplied with new capacity expansions; and aromatics weaken amid falling blending demand. Overall, refining sentiment has bottomed out, with upside potential ahead.

**Polyester: Slowing Capex Growth, Sentiment Rebound** The polyester industry chain shows limited new investments, offering significant recovery potential. PTA capital expenditures have peaked, with no major capacity additions in 2026 and coordinated production cuts among top players aiding sentiment recovery. Polyester filament capacity growth may hold at 2–3%, supported by improving downstream demand, while PET bottle chip capacity expansions are winding down, fostering favorable industry coordination.

**Investment Recommendations** - **Polyester Sector**: Favor filament leader Tongkun Group and bottle chip specialist Wankai New Materials amid tightening supply-demand dynamics. - **Refining**: Focus on leading refiners Hengli Petrochemical, Rongsheng Petrochemical, and Oriental Energy as cost pressures ease and policies enhance competitiveness. - **Oil Companies**: PetroChina and CNOOC are preferred for their high dividend yields amid stable oil price expectations. - **Upstream & Offshore Services**: Offshore capex remains robust; recommend COOEC and CNOOC Engineering. - **Ethane-to-Ethylene**: Satellite Chemical is a top pick given favorable U.S. ethane supply conditions.

**Risks**: Sharp oil price fluctuations, concentrated capacity launches, and global demand or economic downturns.