Oil prices have dropped to their lowest level in 7 months this week and are threatening to break their annual low if the market fails to find something to cling onto. Compared to the relative lull of past weeks, the most recent week-on-week change was drastic – with Brent losing more than 10 percent of its value. The nosedive started when President Trump tweeted his intention to slap a further 10 percent tariff on Chinese imports from September 01 and further deteriorated when market participants started worrying about crude demand faltering in H2 2019.
Rumors that China will not seek to include crude in its retaliatory tariffs have soothed the nervous atmosphere somewhat, yet it will take days if not weeks for the market to see whether or not the global supply-demand balance is better than its participants perceive. As of Wednesday afternoon, global benchmark Dated Brent was assessed around $57 per barrel, whilst the American WTI traded within the $51.5-51.8 per barrel interval.
1. China Crude Imports Bounce Back in July
- China’s crude imports have bounced back in July to 10.08mbpd from a rather lacklustre May-June 2019 which saw refinery maintenance season ?urb domestic demand.
- Ever since the Hengli Refinery went full capacity in May, Saudi Arabia - with whom the Chinese refiner has a long-term supply contract - saw its exports to China surge to an all-time high of 1.8mbpd.
- As a result, Saudi exports to China…