Oil slides on China trade slump, but crude imports remain high

OPEC and some non-OPEC allies have been cutting supply since late 2018, providing oil prices with some support. (Reuters)
Updated 14 January 2019
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Oil slides on China trade slump, but crude imports remain high

  • China’s December overall exports fell by 4.4 percent from a year earlier, the biggest monthly drop in two years
  • In the US, drillers cut four oil rigs in the week to January 11

SINGAPORE: Oil prices fell by almost 1 percent on Monday, with Brent crude slipping below $60 per barrel, after Chinese data showed weakening imports and exports in the world’s biggest trading nation and second-largest crude oil consumer.
International Brent crude oil futures were at $59.91 per barrel at 0403 GMT, down 57 cents, or 0.9 percent from their last close.
US West Texas Intermediate (WTI) crude futures were down 47 cents, or 0.9 percent, at $51.12 a barrel.
China’s December overall exports fell by 4.4 percent from a year earlier, the biggest monthly drop in two years, official data showed on Monday, pointing to further weakening in the world’s second-largest economy. Imports last month also contracted, falling 7.6 percent, the biggest decline since July 2016.
“Crude futures were back in the red as trading began for a fresh week in Asia, in tandem with most of the region’s stock markets ... (as) China early Monday reported $351.76 billion trade surplus in dollar terms for 2018, the lowest since 2013,” said energy consultant Vandana Hari of Vanda Insights in a note on Monday.
The weak trade figures confirm a raft of indicators that have been pointing to an economic slowdown since the second half of 2018.
“Producer price inflation has decelerated for six consecutive months, adding to other signs of cooling industrial activity (in China) amid weakening global demand,” rating agency Moody’s said in a note.
Traders said the data pulled down crude oil futures and Asian stock markets alike, which had both posted modest gains earlier on Monday.
Economic research firm TS Lombard said oil prices were capped as “the world economy is now slowing ... limiting the scope for positive surprises in oil demand and hampering inventory reduction.”
Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank, said “the deterioration seen recently in forward-looking economic data from the US to Europe and China” meant that the upside for crude oil futures was likely limited to $64 per barrel for Brent and for $55 for WTI.
Despite the weak Chinese trade data, the country’s oil imports remained sky-high in December at 10.31 million barrels per day (bpd), holding above the 10 million bpd mark for the second month in a row, on stockbuilding by small independent refiners who were trying to use up annual quotas.
Amid this strong demand from the world’s biggest oil importer, the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC allies, including Russia, have been cutting supply since late 2018, providing crude prices with some support.
In the United States, drillers cut four oil rigs in the week to Jan. 11, bringing the total count down to 873 energy services firm Baker Hughes said in a weekly report on Friday.


BP and SOCAR sign new Azeri oil deal

Updated 19 April 2019
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BP and SOCAR sign new Azeri oil deal

  • The Azeri Central East (ACE) platform, the latest phase of Azerbaijan’s giant Azeri-Chirag-Guneshli (ACG) oilfields extension program, is expected to produce 100,000 barrels of oil a day
  • BP and the government of Azerbaijan extended their agreement to continue developing the ACG fields until 2050 in a major deal in 2017

BAKU: Oil major BP and Azerbaijan’s state energy company SOCAR signed an agreement on Friday to build a new exploration platform for the South Caucasus nation’s three major oilfields, BP-Azerbaijan said in a statement.
The Azeri Central East (ACE) platform, the latest phase of Azerbaijan’s giant Azeri-Chirag-Guneshli (ACG) oilfields extension program, is expected to produce 100,000 barrels of oil a day and cost $6 billion to build, the company said.
The project is one of the biggest upstream investment decisions to have been signed in Azerbaijan so far this year.
The ACG fields, which to date have produced around 3.5 billion barrels of oil, are estimated to have the potential to yield another 3 billion barrels.
BP’s main aim now would be to maximize the extraction of remaining reserves, Robert Morris, senior analyst at Wood Mackenzie, said in a statement.
“ACE is central to those plans, adding 100,000 barrels per day of production at peak in the mid-2020s,” he said.
BP and the government of Azerbaijan extended their agreement to continue developing the ACG fields until 2050 in a major deal in 2017.
Separately, SOCAR and its partners at the BP-led ACG consortium plan to participate in a tender to acquire stakes being sold by two of its members, ExxonMobil and Chevron.
SOCAR President Rovnag Abdullayev made the announcement to reporters following a meeting of senior SOCAR figures on Friday.