Bloomberg Attributed The Decline In Oil Prices In Asia To Weakening Demand In China
Oil prices in Asia declined in July due to weakening demand for this raw material in China, which in turn was caused by the market glut in previous months, according to Bloomberg.
According to him, the premium in the spot price for Russian ESPO oil (ESPO) in the Asian market has halved. In July, Surgutneftegaz signed a contract for the delivery of oil in September with a margin of $ 1.3-1.6 compared to the Dubai grade, the average monthly quotes for which serve as a marker for determining the price in the Asia-Pacific region. Last month, the company "Surgutneftegaz" has signed contracts with a district allowance of $3.8.
In addition, the upper Zakum oil produced in the UAE was sold at a significant discount, and the average monthly quotations for the Dubai grade on July 17 were in a contango situation. This term means that supply prices are currently or in the near future lower than futures for the more distant future. As the Agency points out, this indicates a glut of the market.
As proof of the glut, Bloomberg points to a decrease in production rates at Chinese refineries, as well as the accumulation of tankers loaded with raw materials at ports. Recent flooding in China will only make matters worse, as it may reduce demand, the Agency adds.
In mid-July, the state statistical office of China reported that in the period from January to June, China imported 268.75 million tons of oil, which is 9.9% more than last year. In June, the growth was 34.4%. However, in the past few weeks, as Bloomberg points out, demand for oil has declined.