Not entirely sure about this Ambrose

A dramatic build-up in China’s strategic petroleum reserve and surging demand for imported crude oil are likely to transform the global energy markets this year, regardless of any production freeze agreed by OPEC and Russia this weekend.

Chinese credit stimulus and a 20pc rise in public spending has set off a fresh mini-cycle of growth that is already sucking in oil imports at a much faster pace than expected.

Barclays estimates that the country will import an average of 8m barrels per day (b/d) this year, a huge jump from 6.7m b/d last year. This is arguably enough to soak up a big chunk of the excess supply currently flooding global markets.

Standard Chartered said Chinese imports could reach 10m b/d by the end on 2018, implying a supply crunch and a fresh spike in oil prices as the market is turned on its head.

I’ve seen (briefly, so cannot be sure about it) that a lot of that is refineries taking advantage of changing margins. And they’re exporting the processed fuels. That’s not a change in end demand for oil, just a change in who is refining it.

3 thoughts on “Not entirely sure about this Ambrose”

  1. If when economic forecasters are wrong they are always wrong to the downside, then you’ve found yourself someone who has been told they are “systemically important”

    AEP is up there with Bernanke, Yellen and Krugman in this regard – none of them ever apparently see problems in advance.

    They are all too big to fail.

  2. I don’t see what the problem is exactly.

    From the article my take is that China is buying up cheap oil to put into a strategic reserve. From what I’ve read everyone who can is trying to buy and store oil is doing the same thing. What exactly is the problem with China buying low and selling high?

    What I really don’t understand about most recent articles is the assumption that low oil prices are somehow bad for the economy. Why, when high steel prices are bad, wouldn’t we expect high oil prices to be bad for most of the economy? Obviously for oil workers and ‘greens’ cheap oil isn’t good. I have no clue why it is also good for everyone else.

Leave a Reply

Your email address will not be published. Required fields are marked *