Oil prices edge higher on China’s export data
US crude oil production this year will rise faster, predicts EIA
Oil prices edged higher on Wednesday as Saudi Arabia’s surprise pledge to deepen output cuts outweighed weak Chinese export data and rising US fuel stocks.
Brent crude futures were up 31 cents, or 0.4 percent, at $76.60 a barrel at 1338 GMT, while US West Texas Intermediate crude futures gained 40 cents, or 0.6 percent, to $72.14.Both benchmarks jumped more than $1 on Monday after Saudi Arabia’s decision over the weekend to reduce output by 1 million barrels per day to 9 million bpd in July.
“As things stand, the oil market is on the cusp of a massive shortfall,” said PVM Oil’s Stephen Brennock. “Additional Saudi cuts are expected to deepen the market deficit to more than 3 million bpd in July by some estimates.”
Prices fell earlier in the session on weak Chinese economic data and rising US fuel inventories. China’s exports shrank much faster than expected in May and imports fell, albeit at a slower pace, as manufacturers struggled to find demand abroad and domestic consumption remained sluggish.
US gasoline inventories, meanwhile, rose by about 2.4 million barrels and distillates inventories were up by about 4.5 million barrels in the week ended June 2, market sources said on Tuesday, citing American Petroleum Institute figures.
China’s oil imports
China’s crude oil imports in May rose to the third-highest monthly level on record, customs data showed on Wednesday, as refiners built inventories and stepped up operations after maintenance in April.
Crude imports in May totaled 51.44 million tons, or 12.11 million bpd, according to data from the General Administration of Customs. That was up 12.2 percent from the 10.79 million bpd of crude imported in May last year. Shipments to the world’s largest oil importer increased significantly month-on-month, up 17.4 percent on April’s 10.32 million bpd. Despite a mixed macroeconomic picture, a build-up in inventories has helped to sustain crude import demand. China imported 10.64 million tons of natural gas in May, up 17.3 percent from 9.07 million tons a year ago and representing the highest monthly level since January 2022.
Refined fuel exports rose 49.5 percent to 4.89 million tons from May last year.
US 2023 oil output
US crude oil production this year will rise faster, and demand increases will cool compared to prior expectations, the US Energy Information Administration said on Tuesday.
EIA issued the new outlook after the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, extended output cuts through 2024.
The move by the group will slightly reduce global oil inventories in each of the next five quarters and boost global oil prices in late-2023 and early-2024, the agency predicted in its Short-Term Energy Outlook.
Brent crude prices will average $79.54 a barrel in 2023, about 1 percent higher than previously forecast, and US West Texas Intermediate crude prices will average $74.60, a 1.3 percent increase from EIA’s prior estimate.