China’s Oil Imports Fell In June
China is reported to have imported an estimated 9.2million bpd of crude oil last month, some 1.6 million bpd lower than imports for May, according to calculations by energy analytics provider OilX.
On an annual basis the June average would be about 1 million bpd lower than what China imported in crude oil n June 2021. The analytics said however, that despite the recent series of lockdowns because of Covid flare-ups, China’s oil imports were remarkably stable over the past few months.
China’s intake of Saudi oil declined sharply in June, by more than 800,000 bpd, while imports from Brazil increased by close to 200,000 bpd. Imports from Russia were also higher, but more modestly than imports from Brazil.
Earlier this month, Reuters cited tanker tracking data as showing China had continued buying Russian crude strongly while reducing its intake of Saudi oil, despite lockdowns. In fact, according to that data, Russia was China’s largest oil supplier in June, as it was in May.
Russian oil exports to China have averaged some 2 million bpd last month, accounting for 15% of the country’s demand.
Rising Oil-Fired Power Generation In S’Arabia Could Affect Global Supply
With eyes on summer, direct crude and product burn at power generation plants in the two largest OPEC producers has accelerated, and analysts say this could leave lower available crude supply for international markets.
In Saudi Arabia and Iraq, OPEC’s largest and second-largest oil producer, respectively, burning of fuel oil and direct crude oil use for power generation jumped by 270,000 barrels per day (bpd) in April compared to March.
Commodity analyst Giovanni Staunovo said on Wednesday, citing data from the International Energy Agency (IEA), said so far this year, oil-fired power generation has rebounded to meet strong power demand
Saudi Arabia relies on crude and fuel oil for electricity generation and cranks up direct crude and fuel burns during the scorching summer months.
After OPEC+ decided to accelerate the rollback of the cuts and have those completely unwound by the end of August, some analysts pointed out that the direct crude burn in Saudi Arabia’s power plants could consume a large part of the increase in production.
The higher OPEC+ production targets for the months of July and August coincide with the peak summer heat in Saudi Arabia, which typically increases significantly the volumes of crude and products burned at power plants.
Oil Prices Swing after Slumping on Demand Concerns and Recession Fears
Both key crude benchmarks plummeted as the International Monetary Fund cut the growth outlook of the US economy and OPEC Says Demand Would Outpace Supply in 2023.
Oil prices edged higher on Wednesday after plummeting overnight due to demand concerns and fears of a global recession as the International Monetary Fund downgraded the growth rate of the world’s largest economy.
Brent, the benchmark for two thirds of the world’s oil, fell about 7 per cent to below $100 a barrel but rebounded on Wednesday and was 0.89 per cent higher at $100.7 a barrel at 1.28pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was up 0.88 per cent at $96.68 a barrel after plunging 8 per cent.
Crude prices slumped as OPEC said in its monthly outlook report it expects oil demand to exceed supply by about 1 million barrels a day in 2023.
“Traders are concerned about the sharp increase in the Covid-19 cases in China, and the worry is that this could lead to a lockdown,” said Naeem Aslam, chief market analyst at Avatrade.
“In addition to this, traders are worried about economic slowdown around the globe, and higher inflation readings are increasing the chances for a strong possibility of a recession taking place despite a robust job market.”
World oil demand is expected to exceed pre-pandemic levels in 2022, but the Russia-Ukraine war, pandemic-related developments and inflationary pressures are posing headwinds.
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