Crude Oil Holds Gains Amid Geopolitical Risks and China's Policy Boost

Key Highlights

• Price Movements: Brent and WTI crude prices dipped by 0.2% but retained most prior session gains due to geopolitical risks and China's economic policies.
• Chinese Imports Surge: November crude oil imports rose 14.3% YoY, marking the highest daily average since August 2023, aided by reduced Middle Eastern oil prices.
• Stockpiling Activity: China increased crude stockpiling with new import quotas and refined its Shandong facilities, adding supply security amid geopolitical tensions.
• Market Volatility: Geopolitical risks and China’s loosening monetary policies maintain crude price volatility, with key data on U.S. stockpiles and trade influencing near-term trends.

Petroleum Price: Crude Oil Prices Dip Amid Geopolitical Risks

• Oil prices eased only slightly on Tuesday, holding on to most of their gains from the prior session as mounting geopolitical risk after the fall of Syrian President Bashar al-Assad and China's vow to ramp up policy stimulus kept a floor under prices.
• Brent crude futures were down 13 cents, or about 0.2%, at $72.01 per barrel. U.S. West Texas Intermediate crude futures were down 14 cents, also 0.2% lower, at $68.23 at 0151 GMT. Both climbed more than 1% on Monday.
• MCX Crude oil prices opened at 5787 with a fall of 0.65%.

China’s Crude Imports Rebound in November

• China's crude oil imports jumped in November from a year earlier for the first annual growth in seven months, data showed on Tuesday, driven by lower prices of Middle East supplies and additions to the national stockpile.
• The world's top crude oil buyer took in 48.52 million metric tons last month, data from the General Administration of Customs showed, up 14.3% from 42.45 million tons a year earlier and equivalent to about 11.81 million barrels per day.
• Daily average imports were the highest since August 2023 and up from a low base in November 2023 of 10.33 million bpd. Despite the rebound, year-to-date imports were 1.9% lower, potentially pointing to a decline for the whole of 2024.
• A decline from 2023 would mark the third annual fall in the past five years after pandemic-triggered drops in 2021 and 2022. Refiners in November bought more oil from Saudi Arabia and Iraq following sharp cuts in the official selling prices, offsetting some of the decline in imports of Iranian oil because of reduced loadings in October.

Petroleum News: Stockpiling and Refinery Expansions Bolster Supply Security

• Loadings at export terminals, including Iran's Kharg Island hub, had dropped significantly in October from September, with ship owners concerned about possible Israeli attacks on Iranian oil facilities, according to tanker trackers Kpler and Vortexa.
• China's newest refiner Shandong Yulong Petrochemical ramped up a 200,000 bpd crude unit to around 90%. Yulong Petrochemical is also aiming for trial runs on a second unit of the same size as early as January.
• The new refinery's increased runs and China's issue of an additional crude oil import quota of at least 5.84 million tons (116,800 bpd) to independent refiners for 2024 should help to lift December imports, according to traders.
• China has also asked state oil companies this year to add 8 million tons of crude to its emergency stockpiles to boost supply security. Stockpiling in the eastern province of Shandong, where most refiners are located, started in late September with imports of Russian and Middle East crude, Vortexa analyst Emma Li wrote in a report.

Expert Opinion: Volatility Expected as Key Data Looms

• Crude oil prices are expected to remain volatile in the near term, influenced by geopolitical concerns following the fall of Syrian President Bashar al-Assad and China's move to loosen monetary policy for the first time since 2010. These factors have provided support for crude prices, despite a slight dip on December 10.
• The market is closely monitoring upcoming data, including China's trade figures for November and the American Petroleum Institute's (API) report on U.S. crude oil and gasoline stockpiles, which may further shape price movements in the days ahead.