What's Really Going on in China?

By: Greg Gill / May 3, 2016

Currently, WTI is down $1.28, RBOB is down $.0565 and HO is down $.0233. Oil futures found further direction this morning as reports of weakening demand in China and the global supply glut are coming back to fruition. China, being one of the largest oil producers, as well as consumers in the world, is feeling some pain right now as ships are being forced to wait in long lines to unload crude at the ports. Why is this happening?

It all started with the independent refiners in China who are known as “teapots.” In 2015, these “Teapots,” were given permission to stock up on cheap crude imports while prices were at historic lows. The problem now is that they are importing more than they can consume and/or store in on-land inventory. If you couple the news about the world’s 2nd largest oil consumer (China) having weakened demand with the anticipation of increased OPEC production, sure could create a good opportunity for the bears to come back out to play.

Reuters came out with a story stating that China has suspended the release of output data on multiple commodities- this includes haulting production reports for gasoline, diesel and Kerosene. Some people may question the motive for why the Chinese want to keep this information under wraps. Is it really because they are "cracking down" on the illicit distribution of this type of data, or is there something else that they don't want the rest of the world to know?...

 The question at hand is: have oil prices hit a high point for the month of May? Those who say yes, are likely to believe that as oil prices continue to reach new highs for 2016, that drillers will start to come out of the woodwork, which will only send futures back down once again. As traders sell off some positions after as crude gained nearly 20% in April, it appears that we will have to sit tight and see how the market reacts.

050216.png


Categories: Daily Market Update


Greg Gill

Written by

Greg Gill

I’m passionate about fully understanding my customers’ fuel operations and the fuel markets in which they operate. I want them to view me as their fuel expert. To develop strong, trusting partnerships with customers, I have to provide them with meaningful and timely information to ease the challenges of making smart fuel decisions, allowing them to focus on their core business.


Guttman Energy Daily Market Update Disclaimer – The information contained in this market update is derived from sources believed to be reliable; however this update could include technical inaccuracies or typographical errors and Guttman Energy does not guarantee the accuracy, completeness or reliability of this update. FURTHERMORE, THIS UPDATE IS PROVIDED "AS IS," WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY. GUTTMAN ENERGY ALSO SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES. YOU USE THIS UPDATE AT YOUR SOLE RISK. This update and any view or comment expressed herein are provided for informational purposes only and should not be interpreted in any way as recommendation or inducement to buy or sell products, commodity futures or options contracts.


Comments

Subscribe to our blog

Price Feed

Stay up-to-date on current fuel prices and market trends with our NYMEX price feed (15 minute delay to the live market).

© 2018 Market data provided and hosted by Barchart Market Data Solutions. Fundamental company data provided by Morningstar and Zacks Investment Research. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer.

Categories

Contact Us