Is China Still Hesitant to Buy US Oil? US Crude Exporters Yet to Win the Biggest Market
China is expected to buy very little of U.S. crude oil as it enters the New Year 2019. High freight costs and geopolitical uncertainties are apparently weighing on China’s appetite for U.S. imports. U.S. shale output reached record levels this year, catapulting the nation into the position of the world’s largest oil producer. But with China – the world’s biggest oil consumer – seemingly reducing demand, U.S. crude could potentially lose out on a major revenue stream (atleast in the near-term).
The U.S. tariff war with China was largely centred around the trade gap narrative. With China apparently still not ready to increase consumption of U.S. oil, there could potentially be renewed concerns over geopolitical tensions fueled by U.S. trade deficit with China. U.S. President Donald Trump, however, said at the beginning of the month that negotiations with Beijing are going well.
After halting U.S. oil imports in October and November amidst the trade war, China resumed purchases in December, but bought only 1 million barrels – compared to its more than 300 million barrels of total imports, according to Refinitiv data. Many refineries in China are reportedly reluctant to continue purchases from the U.S. as some aspects of trade between the two nations are still shrouded in uncertainty. On top of that, steep freight costs for transporting oil from the U.S. (relative to several other oil exporting nations) might potentially be dampening China’s demand for American crude.
However, China's overall crude imports from across the globe could touch a record 45 million tonnes (10.6 million barrels per day) in December, with Russia and Saudi Arabia expected to be the top two suppliers – according to Refinitiv senior oil analyst Mark Tay.
Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
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