A drop in Chinese oil imports in July, coupled with the anticipation of a stimulus that will boost the recovery of oil demand in China is contributing to the rebound in oil prices in 2023.
Global oil prices reached new highs on Wednesday, with Brent crude attaining its peak rate since January at $87.65, and U.S. West Texas Intermediate crude (WTI) reaching $84.65, its highest since November 2022.
The increase was prompted by a sharp reduction in U.S. gasoline and distillate stocks, which fell by 2.7 million and 1.7 million barrels respectively, contrary to analysts' expectations for them to remain largely steady, according to Reuters.
The plunge in stocks is causing concerns over inventory tightness, particularly for gasoline, according to Phil Flynn of Price Futures Group. Although there was a higher-than-anticipated build of 5.85 million barrels in U.S. crude stocks, the market appeared to ignore this following a record drawdown the prior week.
Supporting the oil prices further, Saudi Arabia announced the continuation of its voluntary 1-million-barrel-per-day production cut for September, and Russia declared a cut of 300,000 barrels per day in the same month.
The trends were reinforced by last week's sixth consecutive gain in crude, spurred by OPEC+ supply reductions and Saudi Arabia's reaffirmed support for market stabilization measures. The decisions by major oil producers like Saudi Arabia and Russia to restrain supply have been key drivers of this latest recovery, noted Charalampos Pissouros of broker XM.
What about China?
Overview and Economic Growth
China is the world's largest energy consumer and producer. Real GDP growth was 8.1% in 2021 and 3% in 2022, below the official target of around 5.5%.
14th Five-Year Plan
China's 14th Five-Year Plan (2021-2025) emphasizes energy-related strategies. Focus areas include innovation in renewables, hydrogen, fossil fuels, and nuclear efficiency.
Energy Consumption and Composition
Coal supplied 55% of China's energy in 2021, petroleum 19%. Cleaner fuels like natural gas, nuclear, and renewables have increased since 2001. The Plan doesn't cap coal consumption but emphasizes flexible power sources and demand-side response capacities.
Petroleum Consumption and Alternative Fuels
China consumed 15.3 million barrels per day of petroleum in 2021. Factors include lockdowns, economic slowdown, and alternative fuel vehicle penetration. Electric vehicle sales increased by 181% in 2021. Fuel emission standards equivalent to Euro VI are set for full implementation by 2030.
Information of EIA.
Comments