Oil Market Jitters: China's Demand Dip and Mixed US Inventory Report Raise Concerns
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The Commodities Feed: Oil demand risks linger
Weak Chinese oil import data has added fresh con
cerns for the oil market. The EIA report also failed to provide support as a significant rise in the refined product inventories clouded the expectations for a seasonal demand pickup.
Energy – China's crude oil imports drop
The weakness in the oil market persists, with ICE Brent settling down by around 4% yesterday to below US$75/bbl; ICE Brent has dropped by nearly 10% since the OPEC+ meeting. Weaker demand data from China has further weighed on the sentiment in the short term.
The latest trade data from China shows that crude oil imports in the country dropped 9.2% YoY (first annual decline since April) to 42.4mt (10.3MMbbls/d) in November on slowing demand from refineries, weak economic indicators, and higher inventories. Comparatively, China imported around 49mt of crude oil in October 2023, showing a big fall in demand for the fuel. Cumulatively, China’s crude imports have increased by 12% YoY to 515.6mt for the first eleven months of the year, although most of it could be attributed to high imports in the 2nd and 3rd quarters of the year.
The EIA’s weekly US inventory report was fairly mixed yesterday. US commercial crude oil inventories fell by 4.6MMbbls over the last week as the refineries increase their capacity usage during fall maintenance. Earlier, API reported an inventory withdrawal of 0.6MMbbls while the market expected withdrawals of around 0.8MMbbls. Total crude oil inventories (excluding SPR) now stand at 445Mbbls and are about 1% below the five-year average. Meanwhile, oil inventories at Cushing, Oklahoma fell by 1.83MMbbls to 29.6MMbbls. The EIA said that the US crude oil production fell by 0.1Mbbls/d to 13.1MMbbls/d last week.
As for refined product inventories, gasoline inventories rose by 5.4MMbbls, against a forecast for a buildup of 1.2MMbbls. Distillate stockpiles increased by 1.3Mbbls last week, higher than the expectations for a buildup of 1.1MMbbls. Meanwhile, refineries operated at 90.5% of their capacity, up 0.7% from the previous week, but 5% lower than the same period last year.
