Now there is a calm after the storm that sent the oil market a couple of months back. On the one hand, there is an increasing amount of public utterances pointing towards an OPEC+ production cut prolongation. Should the Middle East’s leading producers be persuasive enough to ensure Russia is onboard for the new output curtailment, the markets would be palpably rejuvenated. There is already a sense of that, with leading Russian officials and company CEOs talking of a $30 billion price-drop risk in case of no extension. On the other hand, however, collateral damage from the US-China trade war continues to sully global demand prospects, which, together with US commercial crude stocks jumping to 2-year highs managed to counteract all positive developments so far.
Wednesday witnessed a further weakening of oil prices as the market reacted to API’s anticipated US crude inventory buildup. As a consequence, global benchmark Brent has traded around 60.6-60.8 USD per barrel, whilst WTI was assessed in the 51.7-51.9 USD per barrel interval.
1. Chinese Crude Imports Drop Back to Norm
- China’s crude imports dropped a hefty 11 percent month-on-month to 9.51 mbpd in May 2019 from the all-time record of 10.68mbpd reached in April 2019.
- Despite the commissioning of 400kbpd Hengli and 400kbpd Zhejiang independent refineries, imports in May were hindered by high inventory levels and deal-killing backwardation.
- This June will…