1. China’s oil import surge ended
- China’s imports of crude oil are set to jump 10% this year, but the import surge occurred during the downturn earlier this year when crude prices collapsed. In fact, China’s exports of refined products are on the rise.
- China’s oil demand dipped slightly by 30,000 bpd in October, but the IEA expects China’s demand to be up 480,000 bpd in the fourth quarter from a year earlier, dramatically better than OECD countries.
- Despite Covid-19 vaccine optimism, a huge buildup of global oil inventories also remains. As a result, there is some risk to the price rally going too far in the short run. OECD stockpiles were 11% higher in September than they were in the same month a year earlier.
- Looking forward, the IEA is more optimistic heading into the New Year. “We expect a solid recovery in demand from the lows reached in 2020 due to the Covid-19 pandemic. Oil demand will recover nearly two-thirds of the amount lost in 2020, rising by 5.7 mb/d year-on-year,” the agency said.
2. Oil supply losses from the Big 3
- Global oil supply averaged 92.7 mb/d in November, the highest monthly total since May, but still down 9.2 mb/d from a year ago.
- Expected supply increases in the fourth quarter will come entirely from OPEC+, and the group will also account for 80% of the expected production increases in the first quarter of 2021, according to the IEA.