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Crude production from China jumped in November, just as a production freeze deal by the Organization of Petroleum Exporting Countries (OPEC) caused oil prices to rise over the past two weeks.
China, a country that is not part of the OPEC agreement, saw production increase by 3.4 percent in November to 3.93 million barrels per day, bringing output up from a seven-year low in the months prior, according to Bloomberg’s calculations based on data from the National Bureau of Statistics.
Zero Hedge noted that the hike was the nation’s largest since October 2013 – a full year before the oil price crisis began two years ago.
China’s crude production was about 4.25 million barrels per day in December 2015 when Brent was trading near $35 per barrel. That’s the month that China’s crude production started to freefall, hitting below 4.00 million barrels per day in May of 2016, eventually hitting as low as 3.8 million barrels per day last month, according to Bloomberg calculations.
The Asian country has cut its output over the course of 2016 as government-run funds reduced output to cut extraction costs from expensive mature fields. Stabilizing Chinese production would require prices to stay above $50, industry analysts told Bloomberg.
At the time of this article’s writing, Brent prices stood at $55.61 a barrel – largely due to the price bump following OPEC’s 32.5 million bpd freeze plan starting in January.
“November’s output pickup is probably just a blip, which won’t likely persist," Gao Jian, a Shandong-based industry consultant SCI International, said. “For the next six months, unless oil prices stay above $50 a barrel, we won’t see solid recovery.”
Refineries in China were on a processing tear in November as well, with an average 11.14 million barrels daily processed last month, or a total of 45.77 million tons, which constituted a 3.4-percent annual increase, the country’s National Bureau of Statistics announced. The daily runs were the highest on record.
Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…