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Crude Oil May 21 (CL=F)

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  • Bloomberg

    China’s Oil Giant Sees New Refineries Threatening Global Profits

    (Bloomberg) -- China’s ever-expanding oil refining capacity will increase competition among crude processors around the world and weigh on their margins, the nation’s biggest energy producer said.Refining capacity will reach 900 million tons this year and rise to 980 million tons by 2025, according to a report from Economics & Technology Research Institute, which is affiliated with China National Petroleum Corp. Capacity will outstrip local demand by at least 160 million tons a year by 2025, CNPC said.A frenzy of refinery building means China is on track to surpass the U.S. as the world’s biggest crude processor this year, while a government drive to de-carbonize the economy will weigh on demand growth for fuels like diesel and gasoline later in the decade. The growing imbalance between supply and consumption in China is set to lead to an increase in its fuel exports.See also: China’s Mega-Refineries Throttling Other Asia Oil ProcessorsIn the shorter term, worldwide refining margins will be under pressure as global production is gradually restored following the pandemic, CNPC said in the report. It forecast China’s net fuel exports will jump by 32% to 54.7 million tons this year. Domestic demand for diesel, gasoline and kerosene will peak at around 376 million tons in 2025 and then plateau from there, the Chinese energy giant said.Processing capacity at China’s independent, or non-state-owned refiners, will account for 29.2% of the total this year, CNPC said. A total of 34 refiners in the country will have capacity of over 10 millions tons a year, it said.Here are the new Chinese refining projects listed by CNPC through 2025:China is expected to process 705 million tons of oil this year, a 4.5% increase from 2020. The rise in throughput can be mostly attributed to Zhejiang Petroleum & Chemical Co. and the Sino-Kuwait joint venture refineries. Nationwide, run rates are forecast to average 78% as some plants are phased out, up from 76% last year, according to CNPC.(Updates with forecast of Chinese throughput in final paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Oil Set for Best Week Since Early March on Better Demand Outlook
    Bloomberg

    Oil Set for Best Week Since Early March on Better Demand Outlook

    (Bloomberg) -- Oil edged higher at the end of a week in which prices have climbed on optimism the recovery in demand from the Covid-19 pandemic is improving.Futures in New York rose on Friday and are up more than 7% this week. China’s economy soared in the first quarter, while the country’s refiners processed more than 14 million barrels a day again in March. A Chinese mega-refiner and some Japanese oil companies have also been snapping up crude cargoes, boding well for the physical market.Positive signs from Asia follow a pick-up in the U.S. this week. Data in recent days showed jobless claims falling to a new pandemic-era low, and retail sales and gasoline demand expanding. The global market may see a temporary lull due to new virus outbreaks, according to the the International Energy Agency, but the agency followed OPEC in boosting its full-year estimates for consumption.Not everywhere is recovering strongly, though. In India, refineries are diverting oxygen produced at their plants to hospitals to help battle a serious second wave, which has led to fuel sales tumbling during the first half of April compared with a month earlier.“Given the improving outlook for the world’s two biggest economies, there is little chance of the market’s feel-good glow being extinguished anytime soon,” said PVM Oil Associates analyst Stephen Brennock.With Asian buying picking up, gauges of market strength have also climbed. Brent’s nearest timespread was in a bullish backwardation of 50 cents a barrel on Friday. That compares with as little as 37 cents on Wednesday.The market is also facing an increase in supply in the coming months, although the Organization of Petroleum Exporting Countries said this week that rising demand should trim global stockpiles. Exports of Russia’s flagship Urals crude are set to rise sharply in the first five days of May, a move that pressured swap markets tied to the grade.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Flurry of Oil Trades Led by China Refiner Bodes Well for Demand
    Bloomberg

    Flurry of Oil Trades Led by China Refiner Bodes Well for Demand

    (Bloomberg) -- The physical crude market in Asia has been reinvigorated amid a rise in buying by a Chinese mega-refiner as well as some Japanese oil companies, boding well for improved consumption.Rongsheng Petrochemical Co. came to the market early this month to snap up about 7 million barrels of Middle Eastern varieties for June-July delivery. That’s up from 5 million barrels bought in March, and puts it on course for the biggest monthly purchase since October, according to data compiled by Bloomberg. In addition, spot differentials of Russia’s ESPO cargoes have started off stronger, trading $1 above the last reported deal.The pick-up in activity across the key Asian market comes amid a flurry of signs that global oil consumption is improving as economies including the U.S. shake off the impact of the pandemic. This week, both the International Energy Agency and Organization of Petroleum Exporting Countries issued positive outlooks, even as the cartel and its allies plan to ease supply curbs. So far in 2021, Brent futures have soared 30%, and last traded near $67 a barrel.In Asia, traders had been waiting for further signs of improved demand across the region after buying of spot cargoes by China was muted in March, weakening the overall Asian physical market. That retreat of Chinese buyers coincided with its bigger intake of U.S.-sanctioned Iranian crude, and as higher prices and the backwardated market structure incentivized local de-stocking.While the spot crude purchases of China’s smaller independent refiners will be observed in the coming days, the nation is clearly leading the global recovery in oil consumption. Its refineries processed near-record volumes of crude last month, contributing toward record economic growth in the first quarter.See also: China’s March Apparent Oil Demand Rises 22.5% Y/yRongsheng’s Singapore unit purchased 6 million barrels of Abu Dhabi’s Murban and Upper Zakum, along with a further 1 million barrels of Qatar’s Al-Shaheen for delivery to Zhoushan, according to traders who asked not to be identified.Rongsheng is not alone, with Japanese refiners also out early to secure Middle Eastern supplies. In addition, other processors such as Thailand’s PTT Pcl and Japan’s Fuji Oil Co. issued tenders on Friday to purchase sour grades from the Persian Gulf, of which results will most likely surface next week.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.