Friday , June 18 2021

Oil is rising after China's record-breaking import, but there is an increased risk of over-supply

Oil has risen on Thursday, has been modestly recovering since this week three weeks after record imports of Chinese crude oil affected concerns that the demand for the world's largest commodity customer could be recorded as well as the growth in global supply.

Recording US crude oil and signal production from Iraq, Abu Dhabi and Indonesia that production will grow faster than expected in 2019 Brent's oil carries the lowest price since mid-August earlier this week.

Brent's futures rose 71 cents to $ 72.78 per barrel to 1007 GMT, while US crude futures gained 55 cents to $ 62.22.

"Crude oil prices were bolstered by the October drop in imports of Chinese crude oil … thirst for black products increased in domestic refineries," strategic strategist PVM Oil Associates Tamas Varga said.

China's raw imports rose 32 percent in October, compared to the previous year's 9.61 million barrels a day (bpd), data on customs posted on Thursday.

"Crude oil imports have grown … as uncertainties about US import tariffs and sanctions on Iran mitigated," ANZ Bank said.

Reviving some of the enthusiasm, data showing US output reached a new record level of 11.6 million bpd and forecast that next year grow much faster than many previously anticipated.

The United States has now surpassed Russia to become the world's largest oil producer and the Energy Information Administration said this week that it expects to reach 12 million bpd by the middle of 2019 thanks to oil.

Production has not only risen in the United States, but in many other countries, including Russia, Saudi Arabia, Iraq and Brazil, and threatens to expect demand next year.

Even with US sanctions on Iranian oil, investors' perception is that they have more than enough supply to meet demand, reflecting the trading of contractual agreements with the deadline of one month before the first month with a February discount.

This price structure, known as the contango, is realized when traders and investors believe that supply is higher than demand and therefore have more incentives to store oil and not sell, creating an even larger pool of unsold crude oil.

"OPEC and Russia can use cuts to support $ 70 per barrel," said Ole Hansen, chief of trading strategy at Saxo Bank.

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