Big Red Flag For Crude Bulls: Chinese Oil Refining Tumbles Most In Three Years As Fuel Demand Slides

Monday, August 14, 2017
By Paul Martin

by Tyler Durden
Aug 14, 2017

Slowly but surely, what we have claimed for the past year – that it is the demand side of the oil equation, not the supply, and especially the “Chinese wildcard” that is the critical factor in setting prices – is starting to emerge and be factored in by markets. And so, just days after we posted “Another Red Flag For Oil? China’s Crude Imports Slump To 7-Month Low” arguably catalyzed by the increasingly full Chinese Strategic Petroleum Reserve, overnight we got another major red flag – once again out of China – when Bloomberg reported that China’s oil refining dropped the most in three years for the month of July, while crude output retreated from the highest this year, “as the world’s largest consumer showed signs of losing momentum.”

According to Bloomberg calculations based on NBS data released on Monday, as shown in the chart below oil processing in July dropped 4.4 percent from the previous month to about 10.76 million barrels a day. While daily refining output typically falls from June to July on maintenance, last month’s fall was the biggest seasonal decline since 2014. Crude oil output fell 3% to 3.84 million barrels a day.


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