Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
Reuters reports that, “China’s crude oil imports from the United States soared 13-fold in November from a year earlier to the third-highest on record, customs data showed on Friday, as companies accelerated energy purchases set out under a trade deal with Washington.” China’s U.S. oil imports hit 3.61 million tonnes, about 878,839 barrels per day (bpd). That’s up from 0.26 million tonnes in November last year and versus October’s 1.625 million tonnes, data from the General Administration of Customs showed. The November level compares to the record set in September of 3.9 million tonnes, Saudi Arabia regained its ranking as China’s top supplier with shipments up 43% from October at 8.48 million tonnes, or 2.06 million bpd, as the leading OPEC exporter slashed prices to Asian customers to boost market share.
This comes as private energy forecaster Genscape reported that crude oil supply at the Cushing, Oklahoma delivery point fell by 1.228 million barrels. This is foreshadowing what we believe will be about a 3.5 million barrel draw in U.S. oil inventory. We are also looking for a 2.5 million barrel drop in gasoline supply and distillates down 3.0 million barrels.
There were reports last week by Reuters that Mexico took a controversial step to limit private fuel imports. Mexico’s government has issued new regulations to limit the ability of private firms to import fuel, according to a weekend decree, fanning concerns that the move may unduly benefit national oil company Petroleos Mexicanos (Pemex).
Natural gas is getting slammed on warm weather forecasts yet there is even more drama in the global market. Bloomberg News reports that Iran has slashed the amount of natural gas it exports to Iraq and threatened further cutbacks over unpaid bills, increasing the likelihood of more electricity shortages in Baghdad and other major cities. Iraq has been receiving 5 million cubic meters a day since Iran cut its daily exports from 50 million cubic meters two weeks ago, Ahmed Moussa, a spokesman for Iraq’s electricity ministry, said in an interview. The Iranian government told Iraq it will reduce its supplies to 3 million cubic meters a day starting Sunday, but has not yet implemented the move, he added. Iran started cutting exports to its neighbor, which is OPEC’s second-biggest oil producer, after Iraq fell behind on its gas payments. Iraq owes around $2.7 billion in unpaid bills, Moussa said. Iranian Energy Minister Reza Ardakanian will meet Iraqi officials in Baghdad on Tuesday to discuss the issue, the spokesman said. Power production has dropped by around 7 gigawatts as a result of the gas supply curbs, Moussa said. Baghdad and other central locations have been hit hardest by electricity shortages. While Iraq’s supply of Iranian gas has been disrupted, its electricity imports have continued as normal, he added.
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