Oil prices surge, prepare for these three directions next!

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Source: Tonight’s Fund

Author | Brother Ji

In recent market conditions, I believe many friends, like me, are feeling anxious. The oil prices have staged an epic “roller coaster,” soaring before dropping back down, leaving many people’s hearts in their throats. At this time, the most pressing question on everyone’s mind is:

How far along are we in this cycle of rising commodity prices? Is it still possible to get on board now?

Today, Brother Ji will clarify this logic for everyone. My conclusion is very clear: the story of rising commodity prices is far from over, and now is not only worth paying attention to but is also the golden window period for laying out the “second leg” and “third leg.”

01
The Relay Race of Cycles: Which Leg Are We On Now?

We need to broaden our perspective.

Looking back at the major cycles of the past two to three decades (such as in 2005, after the 2009 subprime mortgage crisis, and the wave from 2020 to 2022), you will find that there is a fixed pattern to the rise in commodity prices.

This logic resembles a carefully arranged relay race, with the usual order being: “Gold starts → Silver follows → Copper confirms → Oil ignites → Agriculture finishes.”

The reasoning behind this is not that complex; it simply follows global economic trends and sentiment! When risk aversion kicks in, gold and silver act as the “safe haven,” and as the economy recovers, the relay unfolds gradually:

First leg (non-ferrous metals): As the economy recovers and factories resume operations, the demand for industrial metals like copper and aluminum increases;

Second leg (petrochemicals): With midstream manufacturing fully starting up, petrochemicals, as the “mother of materials,” begin to explode;

Third leg (agricultural products): Finally, the price increases upstream are transmitted downstream to the consumer end, where supply-demand tightness completes the finale.

What’s the current situation? The first leg (non-ferrous metals) has already been run, the second leg (petrochemicals) is currently taking over, while the third leg (agricultural products) is still warming up in the back!

Therefore, entering the market now is definitely not about chasing the already distant “first leg,” but about precisely positioning in the currently active “petrochemicals” and the soon-to-follow “agricultural products.”

02
Why Can We Still Buy Now? Three Solid Reasons

Some friends might ask: “Brother Ji, oil has already risen so much, isn’t jumping in now just taking over the position?”

Hold on, Brother Ji has three reasons for you:

Reason one: The PPI hasn’t really taken off yet, so the market hasn’t ended. Historical patterns tell us that as long as the Producer Price Index (PPI) begins to rise continuously, upstream raw material companies (especially petrochemicals) are likely to outperform the market. Current data shows that the PPI has just shown signs of stabilization and recovery, indicating that the main upward wave may have just begun.

Reason two: Large funds still have plenty of “bullets.” Brother Ji suggests that everyone look at the positions of public funds in the chemical and petroleum refining sectors, which are actually not high and there is no “rush.” What does this indicate? It means that if the market truly comes, there will be a large influx of incremental funds stepping in. On a track with no crowd, the upward resistance is minimal.

Reason three: The macro narrative is very favorable for price increases. The current international situation, as everyone can see, has significant energy supply pressures. Countries are treating resources and key production capacities as “trump cards” and forming “small circles.” With fewer supplies and a need for safe reserves, can prices not rise? This is the trend.

03
What to Buy Next? Three Major Directions

Now that the logic is clear, what specifically should we buy? Brother Ji has outlined three core directions for everyone.

Direction one: The “stabilizing force” of energy security—oil

The logic is simple: oil prices may still rise. The current energy crisis has lasted longer than anyone expected. Countries may engage in frenzied oil grabbing and stockpiling to prevent supply disruptions. More importantly, the current rise in oil prices has not fully accounted for the potential risks of supply shortages.

How to buy? Focus on the National Oil and Gas Index.

This index focuses on the entire industry chain and leans toward upstream resources, with a high weight on the “three oil companies” (about 37%), making it the most sensitive to rising oil prices. For those looking to position themselves, pay attention to the oil ETF from E Fund (159181), which is a high-quality tool for directly betting on rising oil prices.

Direction two: The “potential player” in the early stage of price increases—chemicals

If oil is the obvious choice, then chemicals are that “wild card” that hasn’t been fully revealed yet.

The chemical sector is regarded as a “potential player” primarily due to the dual resonance of supply and demand.

First, policy constraints have “choked” the supply side. The government’s work report in 2026 first mentioned the carbon emission intensity target, which effectively draws a red line on capacity for high-energy-consuming industries, making existing capacity scarce and precious.

Second, the cost transmission logic is straightforward: oil is the “mother of chemicals,” and the surge in oil prices directly raises the production costs of chemical products. Manufacturers, driven by survival and profit, have a strong motivation to increase prices. At the same time, high oil prices are causing energy-dependent chemical giants in Europe and South Korea to face skyrocketing costs, forcing them to cut production. Chinese chemicals, benefiting from scale effects and cost advantages, are perfectly positioned to take on the global replenishment cycle, with exports likely to see a surge.

Most importantly, the current prosperity of the chemical industry is at a low range not seen in the past five years (20%-30% percentile). At such a low position, coupled with constrained supply, cost-push, and favorable export factors, the future price increase potential and rebound elasticity are worth looking forward to.

How to buy? Keep an eye on the CSI Petrochemical Industry Index, which highly focuses on upstream resources and refining. The corresponding chemical industry ETF from E Fund (516570, connection funds A/C: 020104/ 020105) is currently one of the larger and more liquid tools in the market, making it very suitable for positioning in this round of chemical chain price increases.

Direction three: The “reversal king” at the bottom of the cycle—agriculture

The logic for agriculture is “cost push + supply contraction.”

① Soaring farming costs: As oil prices rise, fertilizers and fuel for agricultural machinery must also rise. Additionally, with one-third of global fertilizer exports passing through sensitive waterways, any obstruction in supply will directly impact grain production.

② The darkest hour for the pig farming industry: This is the key signal. The current average price of live pigs has fallen below 5 yuan/kg, leading to serious losses across the entire industry, with even leading firms like Muyuan losing money. Historically, if the industry suffers deep losses for 10-15 months, it triggers a rise in pig prices.

Brother Ji reminds everyone: the stock market always reacts to pig prices in advance. Typically, the stock market will move ahead of pig prices by 8-10 months. By this estimation, the next 3-6 months represent the best left-side window for positioning in the breeding sector.

How to buy? Focus on the CSI Modern Agriculture Theme Index, which perfectly covers the core tracks of pig farming, planting, and feed. The corresponding agricultural ETF from E Fund (562900) is an efficient tool for capturing this round of agricultural cycle reversals.

When investing in cyclical commodities, the biggest fear is chasing high during the frenzy and exiting before dawn.

The current situation is very clear: the oil market is still ongoing, the price increase in chemicals has just begun, and the reversal in agriculture is right around the corner.

This is a relay race with a rhythm; if we step in time and properly position “oil + chemicals + agriculture” across these three tiers, there is a great opportunity to share in the tide of this round of cyclical commodities.

Of course, the market has risks, and investments should be cautious. The specific operational rhythm should still be determined based on your own positions and risk tolerance.

(This article ends)

Risk warning: Fund practitioner number P1007786100003. The stocks mentioned in this article are only for industry event analysis and do not constitute any stock recommendations or investment advice. Short-term fluctuations in indices, etc., are for reference only and do not represent future performance, nor do they constitute a commitment or guarantee regarding fund performance. Views may change with market conditions and do not constitute investment advice or commitment. The risk-return characteristics of mentioned funds vary, and investors are advised to carefully read the fund legal documents, fully understand product elements, risk levels, and profit distribution principles, and choose products that match their risk tolerance, investing cautiously.

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