Oil rises as OPEC sees Chinese demand rebounding. Influx of Russian crude cools down Asian oil prices. Dubai crude market structure eases as India, China focus on cheaper Russian barrels, OilPrice said.
China’s 2022 data has brought a fair number of bearish fears back into the market as Beijing’s GDP growth last year came in at 3%, well below the mandated level of 5.5% and the worst reading in 45 years. The official confirmation that 2022 was indeed the annus horribilis of Chinese oil demand, with refinery throughputs declining 3.4% year-on-year only added salt to the injury. Offsetting this, OPEC came out firmly in support of a robust Chinese rebound this year, helping ICE Brent to settle back around the $85 per barrel mark.
The influx of Russian crude into the Asian markets is changing the market dynamics in the region and easing pricing pressures, to the relief of many buyers. India’s imports of Russian crude rose to 1.2 million b/d last month, overtaking Iraq and Saudi Arabia, simultaneously displacing a lot of those Middle Eastern barrels elsewhere in Asia. As a consequence, the Dubai market structure continues to trend lower as the cash to futures spread plummeted below $1 per barrel, even lower than a year ago. With India and China hoovering up Russian crude, Japan, South Korea and Thailand have all witnessed substantial increases in Middle Eastern barrels in 2022.
UAE national oil company ADNOC signed a memorandum of understanding with German engineering giant ThyssenKruppto develop industrial-scale technologies that extract hydrogen from ammonia. Norway’s national oil company Equinorhas been suffering recently as its recently launched phase 2 of Johan Sverdrup remains halted after a power outage and is likely to restart in 10 days.
U.S. oil major ExxonMobil is set to launch its $2 billion expansion of the Beaumont refinery in Texas that would almost double the refinery’s capacity to 619,000 b/d and pave the way for enhanced refining of light sweet crude from the Permian.
Chinese refinery burns down.The entire Panjin Haoye Chemical refinery with a nameplate capacity of 130,000 b/d was shut down after a huge blast killed five people and left eight missing, denting oil products supply into the gradually opening Chinese oil market.