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Are China’s Crude Reserves Quietly Dwindling?

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Matt Smith

Matt Smith

Taking a voyage across the world of energy with ClipperData’s Director of Commodity Research. Follow on Twitter @ClipperData, @mattvsmith01

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Oil Prices Rally As Canadian, Nigerian Outages Continue

One hundred and seventeen years after the birth of Fred Astaire, and the oil market is getting its groove on – facing the music and dancing higher. Hark, here are five things to consider in the oil market today:

1) We get all three monthly reports from key sources this week; the EIA kicks things off today with the Short Term Energy Outlook, while the IEA’s oil market report follows on Thursday, before we are set to be scared witless by the OPEC monthly report on Friday 13th (bwhahahaha!). The key themes of OPEC production strength, unplanned outages and market rebalancing are set to reverberate from all three.

2) This article today piqued my interest, suggesting that Kuwait is now the third largest supplier of crude to Japan. Pulling out my spade, I started digging into our ClipperData; Saudi Arabia is consistently the leading supplier, accounting for 31 percent of Japanese imports, while UAE is second with 28 percent. Qatar has been holding on to third place for much of the last year or so, while Kuwait flows have overtaken Russian imports since late last year. Related: Saudi Arabia To List Aramco Shares In New York, London, Hong Kong

Nonetheless, despite a push by Kuwait, it is still getting edged out of third place by Qatar, who looks to defend its market share with its biggest customer.

(Click to enlarge)

3) Stat of the day: Nigeria’s state-run National Petroleum Corp recorded 3,153 punctured points on its oil pipelines through the last 12 months (through the end of March) due to ‘incessant vandalism’. Fears of increasing violence is on the rise with a new militant group operating in the area. As we have mentioned recently, sabotage to the Forcados export line has materially cut crude loadings from Africa’s largest oil exporter. Related: A Glimpse Into What Saudi Arabia’s New Oil Policy Will Look Like

4) Onto the economic data front, and we’ve had the latest round of Chinese inflation data, which came in at a minor miss of +2.3 percent YoY (versus consensus of +2.4 percent). Once again, the devil is in the details, however, as pork price inflation accelerated to 33.5 percent YoY (down from 28.4 percent last month), although offset by a slower increase in vegetable prices. Food prices account for approximately a third of Chinese inflation. Chinese producer prices fell again, but at the slowest rate in 16 months.

5) Finally, the duplicitous state of the oil market is typified in two articles today; the first draws attention to an estimate of offline Canadian production of 1.6 million barrels per day to wildfires. If true, this would wipe out – albeit temporarily – the entire oversupply in the global market. The second article leads with the headline ‘Saudi Aramco CEO sees ‘signficant growth’ in oil output in 2016‘, highlighting that Saudi Aramco is looking to boost capacity at its Shaybah oil field by 33 percent in the next few weeks to 1 million bpd.

By Matt Smith

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  • nat on May 10 2016 said:
    China - Russia marriage ... wedding ... is a shotgun marriage.

    They have a bitter skeletons in the cupboard.

    They have the psyche and DNA leftover and simmering in the territorial grab China did of the mid-river island ... today China does it with stealth and guile, which CHALLENGES THE sage wisdom ...

    Tibet, Bhutan, Nepal, South China Sea, etc, and their introduction of the precept that every oil platform (artificial island), pole in the sea, etc is a CHINESE territory! Since when?

    The whole sky belongs to China, due to satelites in the sky.... etc ...

    Well, they are waiting for the other shoe to drop ... i.e. you can fool all the people sometime, but you can't fool all the people all the time!

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