Strong Oil Imports in China As Oil Prices Surge

The Chinese oil import was robust as supported by the crude oil prices according to traders. The Organization of the Petroleum Exporting Countries (OPEC)  planning for a production cut. Currently, the global oil market is approximately balanced following years of oversupply.

The U.S. West Texas Intermediate (WTI) crude was set at $50.94 per barrel as of 05.00 GMT where it increased by 34 cents or 0.7 percent from their previous price. On the other hand, Brent was $56.59 rose by 34 cents or 0.6 percent.

The U.S. crude inventories lost 2.7 million barrels for the week to October 6, down to 462.22 million barrels, according to the Energy Information Administration (EIA) said late on Thursday. Crude production dropped 81,000 barrels per day (bpd) to 9.48 million bpd. On the average, exports from China reached an average of 8.5 million bpd between January and September and achieved 9 million bpd in September. At the same time, this was supported by the prices as China became the world’s biggest importer. Although, the strong oil imports at 12.2 percent would result in a weaker demand in China.

Amid the tightening of the market, the OPEC has to continue to production cutover than the current expiry date in March next year when the inventories have hit normalized level before 2018 ends. The OPEC, as well as Russia, has been limiting their output since January while the agreement to cut production by the end of March 2018. There is a deliberation that there will be an extension.

Traders are waiting for the decision of the U.S. President Donald Trump on whether the 2015 Iran nuclear deal will be pushed through. It is anticipated not to be certified which has to be renewed on Sunday and has to certify again every three months. The United States would not be withdrawn from the deal yet the next step would allow 60 days for the Congress to surmise on the reimposition of new sanctions. The punitive measures of the U.S. could result to reduce the volume of oil trade with Iran whereas, around 1 million bpd of supplies were cut. As for now, it wouldn’t be that big in number but it is still relevant.