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China’s Refinery Demand Nears a Record: Are the Bulls in Control?

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China’s refinery demand

On July 17, 2017, China’s National Bureau of Statistics reported that China’s refinery demand had risen 230,000 bpd (barrels per day) to 11.2 MMbpd (million barrels per day) in June 2017 compared to May 2017.

Refinery demand in the country rose 2.1% month-over-month and 2.3% year-over-year (or YoY). Demand was at its second-highest level on record. It rose as a result of rising demand from small independent refiners.

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Any rise in Chinese refinery demand is bullish for crude oil (SCO) (BNO) (USL) prices. China is the world’s second-largest consumer of crude oil after the United States. Higher crude oil prices positively affect oil producers such as ConocoPhillips (COP), Chevron (CVX), Goodrich Petroleum (GDP), and Bonanza Creek Energy (BCEI).

China’s crude oil imports

The United States started exporting crude oil after lifting its export ban in December 2015. So far in 2017, China’s crude oil imports from the United States have averaged 100,000 bpd. However, its imports rose to 180,000 bpd in May 2017.

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China’s crude oil imports and GDP 

China’s crude oil imports averaged 8.6 MMbpd in 1H17, 18.8% higher than their level during the same period in 2016. The improving Chinese economy supported crude oil imports. Chinese GDP rose 6.9% in 2Q17, compared to the market’s expectation of a rise of 6.8%.

Impact

The rise in crude oil imports from the United States suggests that Chinese crude oil demand is improving. Improving Chinese GDP and refinery demand also suggest that Chinese crude oil imports and demand may not slow down. Such a scenario is bullish for crude oil (XLE) (IEZ) prices.

For more information on crude oil price forecasts, read US Crude Oil Futures Rose above 20-Day Moving Averages. Read US and OECD Crude Oil Inventories Are Important for Oil Bulls and OPEC and Non-OPEC Meeting Could Drive Crude Oil Futures to learn more about crude oil.

You can also read Will Natural Gas Outperform in 2H17? for more on natural gas.

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