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Will China’s Crude Oil Imports Rise in 2018?

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China’s crude oil imports  

The US and China are the largest crude oil consumers in the world. China’s crude oil imports increased 10% to 8.4 MMbpd (million barrels per day) in 2017 from 2016, according to China’s General Administration of Customs. Higher imports supported oil (BNO) (USO) prices in 2017. Brent and WTI oil (UCO) prices increased ~17% and ~12% in 2017.

High oil prices benefit oil producers (RYE) (XLE) like BP (BP), Chevron (CVX), PDC Energy (PDCE), and Stone Energy (SGY).

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Drivers of China’s crude oil imports

China’s crude oil imports increased due to the rise in imports from teapot refiners and filling up strategic crude oil reserves in 2017. Crude oil imports from teapot refineries are expected to rise 55% in 2018 from 2017. The rise is due to increased quotas to teapot refineries for 2018.

Higher demand supports oil (BNO) (USL) prices and benefits funds like the iShares U.S. Energy ETF (IYE) and the iShares Global Energy ETF (IXC), which have exposure to oil and gas companies.

Estimates 

China’s crude oil imports increased by 800,000 bpd in 2017, which was 50% of the global oil demand growth in 2017. China National Petroleum (CNPC) expects that China’s crude oil imports could hit 9 MMbpd in 2018—7.7% higher than 2017. Any rise in demand from China is bullish for oil (USO) (SCO) prices.

However, crude oil prices are near a three-year high. Higher crude oil prices reduce refinery margins, which could impact demand and oil (USL) prices.

Next, we’ll discuss some crude oil price forecasts.

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