Source: Fortune
Summary
China’s reduced crude oil imports have helped delay the global oil market’s “moment of truth” when inventories reach critically low levels. China’s imports plunged 20% in April and data for May suggest a steeper decline. Analysts had predicted record-high oil prices by June, but the latest evidence suggests Chinese refiners are absorbing a greater share of the global oil shock, potentially pushing back the “tipping point” to July. Exxon and Chevron executives have warned of low inventory levels, while analysts at UBS and JPMorgan have cautioned of potential price volatility.
Our Reading
The numbers tell one story. China’s reduced oil imports have become the stealthy swing consumer, potentially holding off doomsday a while longer. Exxon’s Neil Chapman warned of “unheard of inventory levels,” while Chevron’s Mike Wirth expects oil prices to jump as the market’s “shock absorbers” are depleted. Analysts at UBS and JPMorgan have cautioned of potential price volatility, but Robin Brooks at the Brookings Institution argues that oil markets have more wiggle room than thought. China’s vast stockpiles, estimated at 1.4 billion barrels, remain a mystery, but its reduced imports have given the global oil market a temporary reprieve.
China’s reduced oil imports have become the stealthy swing consumer, potentially holding off doomsday a while longer.
Author: Evan Null
