China's Increased Crude Oil Imports and Stimulus Expectations Positively Impact Oil Prices
According to Commerzbank's latest report, China's increase in crude oil imports in November is not a sign of stronger domestic demand. Crude oil imports reached 11.8 million barrels per day, a 14% increase compared to the same period last year. This figure represents the highest monthly volume since August 2023. However, this increase is attributed to refineries taking advantage of low price levels to build up their stocks and the commissioning of new crude processing capacities.
The bank anticipates that crude oil imports may decline again in the coming months due to weak domestic demand in China. Despite the increase in November, crude oil imports for the first eleven months of the year are down 1.9% compared to the previous year. This situation indicates that it could be the third annual decline in the last four years.
In another analysis by Commerzbank, uncertainties in the Middle East and demand signals from China are supporting crude oil prices. The collapse of the Assad regime in Syria is reshaping the geopolitical balance in the region, leading to a risk premium in oil prices. Although Syria is not a major oil producer, it holds significant importance in the energy markets due to its strategic location.
Meanwhile, Saudi Arabia has cut official selling prices for Asian customers to the lowest level in four years. According to December 2023 prices, the premium for Arab Light oil compared to Oman/Dubai has dropped to $0.90, marking the lowest level since January 2021. The decrease in prices due to weak demand in Asia is noteworthy, given that 80% of Saudi oil is sold to Asia.
China's move towards a loose monetary policy has also positively influenced oil prices. Following the government's announcement to support economic growth through a loose monetary policy, oil prices rose on Wednesday. The price of Brent crude increased by 0.5% to $73 per barrel, while West Texas Intermediate (WTI) crude rose by 0.6% to $69.4.
Analysts state that the Beijing administration is preparing to ease monetary policy for the first time in 14 years. However, it is indicated that policy changes may only prevent declines in the market. Additionally, analysts remain cautious about the effectiveness of these changes against possible trade measures that could arise under a Donald Trump administration.