• "Spreading the ideas of freedom loving people on matters regarding high finance, politics, constructionist Constitution, and mental masturbation of all types"

Oil prices jump as China imports soar, Canada fires still burn

Scorpio

Hunter of Chin Li's Boo Hoo Flu
Founding Member
Board Elder
Site Mgr
Midas Supporter ++
Joined
Mar 25, 2010
Messages
32,335
Likes
46,455
#1
Oil prices jump as China imports soar, Canada fires still burn

By Jenny W. Hsu, Ben Dummett , and Chester Dawson
Published: May 9, 2016 6:40 a.m. ET


Market absorbing dismissal of Saudi Arabia’s oil minister


Getty Images
Oil prices were higher on Monday, boosted by strong crude imports from China and wildfires in Canada, amid market uncertainty generated by the removal of Saudi Arabia’s long-serving oil minister Ali al-Naimi.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in June CLM6, +2.10% traded at $45.54 a barrel, up 2%, or $0.89 in the Globex electronic session. July Brent crude LCON6, +1.56% on London’s ICE Futures exchange rose $0.70, or 1.5%, to $46.07 a barrel.

China’s crude imports rose 7.6% on-year last month, marking the third straight month that crude imports surpassed 30 million tons. On a daily basis, China shipped in 7.9 million barrels a day in April.

In the first four months of the year, China imported 123.67 million tons of crude, equivalent to a 12% on-year rise.

The strong flow of foreign crude is heavily supported by the rising number of local refineries, known as teapots, that have been allowed to import crude directly from a foreign source since less than a year ago.

“This is giving the market hope that China’s appetite for crude will remain elevated at a time when the world is flooded with oil,” said Ben Le Brun, an energy analyst at Sydney-based OptionsXpress.

The ongoing wildfire near the hub of Canada’s oil sands is also stoking hope that disaster could help ease the global supply glut.

At least 645,000 barrels a day of oil-sands output, or more than a quarter of Canada’s total 2.5 million barrels a day in oil-sands production, have been sidelined, based on public announcements.

But the true figure may be close to one million barrels a day of production because two of the largest operators haven’t specified the extent of their production losses due to the fire fallout.

However, the sharp rise in oil prices was still somewhat of a surprise to some analysts who expected prices to take a hit after Saudi Arabia unexpectedly replaced Naimi, one of the most respected figures in the oil industry for decades, with Khalid al-Falih, the chairman of state-owned oil company Saudi Aramco.

To some, the removal of Naimi means a reaffirmation that 31-year-old Deputy Crown Prince Mohammed bin Salman is the one driving Saudi Arabia’s energy policy. Some officials at the Organization of the Petroleum Exporting Countries said that could mean a deeper politicization of oil-production strategy as the kingdom looks to neutralize its rival Iran, which is trying to come back from years of Western sanctions with a surge of output.

The reshuffle came at a time when many oil producers are struggling with the persistently low prices due to overproduction. An attempt to curb global output was foiled last month when Saudi Arabia at the last minute refused to take part in a collective freeze when Iran wouldn’t change its mind on ramping up production until it reaches the pre-sanction level of around 4 million barrels a day.

“Iran has always been a big competitor for Saudi, even during sanctions as Iran was still exporting over one million barrels a day to Asian countries. They were also discounting their crude back then,” said Amrita Sen, chief oil analyst at Energy Aspects.

Morgan Stanley said in a note that Iran’s success in ramping up post-sanctions production may remove some of its reluctance to join a price freeze. Oil output from the Islamic Republic could soon hit 4.2 million barrels a day which would represent a rise of 800,000 barrels a day since November, the bank said.

In other trading, Nymex reformulated gasoline blendstock for June RBN6, +0.76% — the benchmark gasoline contract — rose 220 points to $1.5182 a gallon, while June diesel traded at $1.3510, 137 points higher

http://www.marketwatch.com/story/oil-prices-rise-after-china-crude-imports-soar-2016-05-09