China’s crude oil production
The data compiled by Bloomberg state that China’s crude oil production could fall by 3%–5% in 2016. The fall in China’s crude oil production would be substituted by the rise in China’s crude oil imports. China is the second-largest crude oil importer. It’s also the fifth-largest crude oil producer in the world. China’s crude oil production hit 4.3 MMbpd (million barrels per day) in 2015. The Chinese crude oil production is expected to fall in 2016 due to the higher total cost of producing crude oil.
China’s crude oil production could fall
The break-even costs for China’s top oil producers like CNOOC (CEO) were at $41 per barrel. Some of the other key Chinese oil producers are China Petroleum & Chemical (SNP) and PetroChina (PTR). The historic fall in crude oil impacts Chinese oil and global oil producers like BP (BP), Total (TOT), and Eni (E). The higher break-even costs pushed Chinese and international oil producers to curb production and slash capital expenditures. So, we could see China’s crude production decline in the years to come.
However, the depreciating Chinese dollar could impact China’s crude oil imports. To learn more, read How China Is Creating a Big Crack in the Global Crude Oil Market. You can also read China’s Crude Oil Imports: Teapot Refiners Will Be Key Catalysts.
The catastrophic fall in crude oil prices impacts US oil producers like Apache (APA), Murphy Oil (MUR), and Hess (HES). The ups and downs in the oil and gas market also impact ETFs like the Fidelity MSCI Energy Index ETF (FENY) and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).
In the next part of this series, we’ll look at forecasts for crude oil prices.