Platts Analytics sees oil prices struggling to go beyond the
mid-$40s/bbl mark by the end of calendar year 2020 (CY20) before creeping up to
$50/b by end-2021.
China may have
given oil
markets false hope. A rapidly rebounding economy in the Asian powerhouse
had initially revived demand, but bloated inventories and stockpiling by
domestic refineries have exposed the fragility of prices.
A look at Chinese ports tells the full story. Shandong - home to a host of
independent refineries - is completely congested. The volume of crude stored on
tankers idled in Chinese waters near the port city for over a week has
quintupled from normal levels.
Chinese
refineries, which had taken advantage of relatively cheap prices over the past
quarter, are now struggling to find buyers for products, dampening the appetite
for crude further. Oil imports have extended losses as expected - dropping 7.4
per cent to a four-month low of 11.23 million b/d in August from July, data
from China's
General Administration of Customs, showed recently.
The volumes have
been on a decline since July, when they peaked at close to 13 million b/d amid
rising stocks in crude and oil products. Crude imports in September are set to
decline further, with lower new arrivals than in the previous months. New
arrivals into Qingdao port, China's top crude port on turnover, were estimated
to have dropped by about a quarter to 2 million-3 million mt in September from
June-August, a port official said.
India limps along
With Chinese
demand stalling, the market is looking to India to buy more marginal barrels.
State-owned refineries, which tend to focus on domestic demand, have seen runs
increasing as consumption starts to slowly recover. However, export refineries
- predominantly owned by the private sector - have seen runs decreasing due to
a lack of demand and negative margins.
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