China’s Refinery Demand Falls to Lowest since September 2016
China’s refinery demand
China’s General Administration of Customs reported that the country’s refinery demand fell by 500,000 bpd (barrels per day) to 10.7 MMbpd (million barrels per day) in July 2017, the lowest level since September 2016.
China is the second-largest consumer of crude oil. A fall in Chinese refinery demand may have a negative impact on crude oil (USO) (UCO) prices. Lower crude oil prices have a negative impact on oil producers like Carrizo Oil & Gas (CRZO), PDC Energy (PDCE), and Continental Resources (CLR).
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China’s crude oil production
The EIA (U.S. Energy Information Administration) estimates that China’s crude oil production averaged 3.8 MMbpd in April 2017. Production fell 0.3% month-over-month and 3.5% year-over-year. Production is at a seven-month low.
China’s crude oil imports
China’s crude oil imports were at 8.2 MMbpd in July 2017, the lowest level since January 2017. Imports fell due to the decline in imports from Chinese refiners. China’s (FXI) crude oil imports are 12% higher than during the corresponding period in July 2016, which is bullish for crude oil (XOP) (SCO) prices.
Chinese crude oil imports and demand are expected to rise in 2H17 due to slowing production from aging Chinese crude oil production fields and a rise in demand from Chinese teapot refiners, which would support crude oil (IEZ) (XES) prices. Higher crude oil prices have a positive impact on producers like Carrizo Oil & Gas and PDC Energy.
In the next part, we’ll discuss Libya and Nigeria’s supply outages.