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2016-12-02 19:00:00

CHINA'S OIL BENEFITS

CHINA'S OIL BENEFITS

WSJ wrote, for China's beleaguered oil sector, a deal by the Organization of the Petroleum Exporting Countries to cut output could offer a lifeline to an industry that has been hammered by low prices—and may also hasten its shift away from a heavy reliance on Saudi crude.

If successfully implemented, the deal portends important shifts in how China buys foreign oil, analysts said. It could also help stem a recent slide in domestic production, which in turn would protect jobs across its troubled energy patch.

It is tough to overstate China's importance to OPEC and the energy industry. In addition to being one of the biggest oil importers, it is also a huge producer, making it vulnerable to the supply glut that has roiled markets since 2014.

The agreement Wednesday by OPEC calls for cutting production by 1.2 million barrels a day, which sent benchmark oil prices soaring to more than $50 a barrel in Asia trading on Thursday, up about 9% versus a day earlier.

While uncertainty remains over how the deal will play out, if implemented Saudi Arabia could see its market share in China eroded by Iran and other OPEC rivals. Saudi Arabia takes on the highest burden of cuts under the agreement—486,000 barrels a day—and that could open a door for others to compete in China.

"If that happens, Saudi Arabia will have to reduce its exports more" than others in OPEC, said Sushant Gupta, oil analyst at the consultancy Wood Mackenzie.

Already the Saudis are losing market share in China. Its oil makes up about 14% of China's total crude imports, down from nearly 20% five years ago.

In many ways, a range of $55-$60 per barrel—where some observers believe prices could ultimately be headed in the coming months if the deal holds—is a sweet spot for China.

On one hand, higher prices would cut losses at domestic oil fields, which have contributed to lower overall profits for China's state-owned energy companies—and ultimately less revenues for the government.

At the same time, the moderate price rebound means China's import bill for oil from abroad will still remain far below what it was when prices topped $100. That is also good news for the government, which has worried about capital outflows.

One area to consider is how a sustained uptick in prices affects domestic production. China's aging fields are more expensive to pump than those of other countries. That has led to a steep drop-off in output as global prices plummeted, particularly at huge onshore fields such as Daqing in northeast China.

"It has the potential to stem the decline and move things toward some sort of stability on what has been a one-way train," said Thomas Hilboldt, head of Asia-Pacific resources and energy research at HSBC.

Rising imports by China always made it a key market for OPEC. As legions of new Chinese drivers have taken to the roads in recent years, demand for oil has steadily risen.

Yet, OPEC's intention to cut production now comes just as China's own import growth is also likely to ease next year. Chinese demand is a key determinant of global prices, meaning without the agreement, the global glut that depressed markets would only deepen, analysts said, adding to OPEC's urgency to act.

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Earlier:

CHINA: 

VENEZUELA & CHINA: $50 BLN 

CHINA'S TAX EXPORTS 

CHINA'S SHALE GAS UP 

CHINA OIL IMPORTS UP 

CHINA'S OIL PRODUCTION DOWN BY 10%

 

OPEC: 

OPEC PRODUCTION TARGET 32.5 MBD 

OPEC WILL CUT 1.2 MBD 

OPEC'S CAUTIOUS OPTIMISM 

OPEC OIL PRODUCTION 33.64 MBD 

SOLIDARITY WITH OPEC

 

PRICES: 

OIL PRICES: ABOVE $52 AGAIN 

OIL INVESTMENT: -$1.99 TLN + $630 BLN 

2017: DEMAND RECOVERY 

RUSSIA CAN CUT 300 TBD 

IRAQ'S THREE PROPOSALS

 

Tags: CHINA, OPEC, OIL, PRICES, PRODUCTION

Chronicle:

CHINA'S OIL BENEFITS
2018, August, 17, 11:30:00

U.S. INDUSTRIAL PRODUCTION UP 0.1%

U.S. FRB - Industrial production edged up 0.1 percent in July after rising at an average pace of 0.5 percent over the previous five months. Manufacturing production increased 0.3 percent, the output of utilities moved down 0.5 percent, and, after posting five consecutive months of growth, the index for mining declined 0.3 percent. At 108.0 percent of its 2012 average, total industrial production was 4.2 percent higher in July than it was a year earlier. Capacity utilization for the industrial sector was unchanged in July at 78.1 percent, a rate that is 1.7 percentage points below its long-run (1972–2017) average.

CHINA'S OIL BENEFITS
2018, August, 17, 11:25:00

NORWAY'S PETROLEUM PRODUCTION: 1.911 MBD

NPD - Preliminary production figures for July 2018 show an average daily production of 1 911 000 barrels of oil, NGL and condensate, which is an increase of 64 000 barrels per day compared to June.

CHINA'S OIL BENEFITS
2018, August, 17, 11:20:00

GAZPROM NEFT NET PROFIT UP TO 49.6%

GAZPROM NEFT - For the first six months of 2018 Gazprom Neft achieved revenue** growth of 24.4% year-on-year, at one trillion, 137.7 billion rubles (RUB1,137,700,000,000). The Company achieved a 49.8% year-on-year increase in adjusted EBITDA, to RUB368.2 billion. This performance reflected positive market conditions for oil and oil products, production growth at the Company’s new projects, and effective management initiatives. Net profit attributable to Gazprom Neft PJSC shareholders grew 49.6% year on year, to RUB166.4 billion. Growth in the Company’s operating cash flow, as well as the completion of key infrastructure investments at new upstream projects, delivered positive free cash flow of RUB47.5 billion for 1H 2018.

CHINA'S OIL BENEFITS
2018, August, 15, 11:10:00

OIL PRICE: NEAR $72

REUTERS - Front-month Brent crude oil futures LCOc1 were at $72.34 per barrel at 0648 GMT, down by 12 cents, or 0.2 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 23 cents, or 0.3 percent, at $66.81 per barrel.

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