China’s Crude Oil Imports and Demand Impact Crude Oil Prices By...

China’s Crude Oil Imports and Demand Impact Crude Oil Prices
By Gordon Kristopher | Dec 21, 2016 6:42 am EST

China’s crude oil imports
China’s General Administration of Customs reported that China’s crude oil imports rose to 7.87 MMbpd (million barrels per day) in November 2016. Imports rose 16.1% month-over-month and 18.3% year-over-year. China’s crude oil imports rose due to the rise in demand from its teapot refineries. The rise in crude oil imports from China supports crude oil (USO) (UCO) (PXI) (ERX) (USL) (RYE) prices.
China is the second-largest crude oil consumer after the US.





China’s crude oil imports and demand

• Platts surveys suggest that China’s crude imports in 2016 will average 7.4 MMbpd (million barrels per day)—10% higher than 6.7 MMbpd in 2015 due to demand from its teapot refineries.
• China’s fuel exports hit a record high at 4.85 million tons in November 2016. It’s 18.3% higher than the same period in 2015. The rise in Chinese fuel exports will put pressure on refined product margins. To learn more, read How Lower Refinery Margins Impact Crude Oil Prices.
• Slowing Chinese crude oil production due to aging oilfields and lower crude oil prices could also increase China’s crude oil imports.
• The EIA estimates that China is planning to build 500 million barrels of strategic crude oil reserve space by 2020. It could also add to imports.

Impact on crude oil, energy stocks, and ETFs
Higher crude oil imports from China could benefit crude oil prices. High crude oil prices could have a positive impact on producers’ margins like Goodrich Petroleum (GDP), Chevron (CVX), Bill Barrett (BBG), ExxonMobil (XOM), Swift Energy (SFY), and Whiting Petroleum (WLL). However, China is exporting refined products. The glut in the refined products market could pressure crude oil prices.

Uncertainty in crude oil prices also impacts ETFs and ETNs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the Fidelity MSCI Energy (FENY), the ProShares Ultra Oil & Gas (DIG), and the Vanguard Energy ETF (VDE).

http://marketrealist.com/2016/12/chinas-crude-oil-imports-demand-impact-crude-oil-prices/