The main drivers in the oil market recently called shale sector of the United States and production in the OPEC countries, but soon there might to go China and derail quotes, write “News.Economy.”
The attempt of OPEC and Russia to reduce the global offer in the global oil market could prove futile, and the reason could be China. This opinion was expressed by one of the authors of Oilprice. China the last decade has been actively buying up oil to replenish their oil reserves. And although their volumes are not disclosed, using indirect data, experts estimate the size of the strategic reserves of China’s 600 million barrels as of may this year.
Assuming that from may to August, stocks rose even, quite possibly, now, the Chinese oil reserve comparable to the us, which is 678,9 million barrels.
According to the Financial Times, this year, oil imports in China rose at a record pace, and his day had increased numbers of American imports to 8 million barrels a day.
Analysts believe that most of this import goes just in the reserves, but storage is not unlimited, so we can assume that now the reserves is close to its maximum. This fact, again, according to analysts, could trigger chaos in the market.
According to RBC Capital Markets strategist Michael Tran, this year China’s oil imports grows twice as fast as in previous years, which consequently supported the oil prices. As a result, if oil imports to China will begin to decline, and this, if you believe the conclusions of the analysts, inevitably, it will fall and demand, and hence prices will lose support.
By the way, in July, the volume of oil imports of China declined to the lowest levels since the beginning of the year to 8.16 million barrels a day.
In the Financial Times saying that the rate of growth of oil import to China in the second half of the year may be reduced to 700 thousand barrels per day, and the next year, and at up to 100 thousand barrels. Thus, by the end of next year, the oil storage of China can be filled to the limit.
- The IMF has lowered its forecast for price of oil
Meanwhile, the authors of the article said that OPEC and Russia agreed to limit production only until March 2018, at least for now. This may mean that by the summer, production in these countries will again be increased. It is unlikely that oil producing countries will take such a step and launched a price war in the oil market. Obviously, such actions only hurt themselves oil producers, so they will try all possible ways to maintain relatively high oil prices.
Now all traders are glued to the effects of the hurricane “Harvey” in the United States. Gasoline futures already soared to 6%, and oil also went up, but not too tight yet.
However, the consequences can be felt for another few months, so in the near future about the China factor, most likely, no one will remember, besides the fact that estimates regarding the Chinese reserves are correct.