{"id":138327,"date":"2021-09-10T07:08:33","date_gmt":"2021-09-10T07:08:33","guid":{"rendered":"https:\/\/precoinnews.com\/?p=138327"},"modified":"2021-09-10T07:08:33","modified_gmt":"2021-09-10T07:08:33","slug":"wuhan-coronavirus-fuels-conflict-among-opec-nations-2","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/wuhan-coronavirus-fuels-conflict-among-opec-nations-2\/","title":{"rendered":"Wuhan coronavirus fuels conflict among OPEC nations"},"content":{"rendered":"<p><cite>Hong Kong (CNN Business)<\/cite>Oil is cheaper right now than it has been in years. That&#8217;s great news for China \u2014 the world&#8217;s second largest consumer of oil and its biggest importer \u2014 which has been building up huge reserves and needs energy to restart its economy. <\/p>\n<p>US oil futures and Brent crude cratered to 18-year lows last month as demand collapsed because of lockdowns sparked by the coronavirus pandemic, and as Saudi Arabia flooded the market with additional supply in a price war with Russia.<br \/>\nWhile prices have recovered somewhat since then on hopes that OPEC and Russia may agree to cut production, it&#8217;s still &#8220;clearly good timing&#8221; for the world&#8217;s largest importer of crude to step in and snap up whatever it can, according to Dennis Ip, head of China and Hong Kong energy research at Daiwa Capital Markets.<\/p>\n<ul><\/ul>\n<h3>Stocking up on foreign oil<\/h3>\n<ul><\/ul>\n<p>Hoarding inexpensive oil is critical for China, which has been working for years to bolster its emergency stockpile of oil reserves. <\/p>\n<p>As the country&#8217;s economy grows, China has become increasingly reliant on foreign oil. Last year, it imported 72% of the crude oil it used, the highest proportion on record, according to CNPC Economics and Technology Institute, the research arm of a major state-owned energy conglomerate in China.<br \/>\n<img decoding=\"async\" alt=\"Trump&amp;#39;s incredible 180 on OPEC, oil and free markets \" class=\"media__image\" src=\"\/\/cdn.cnn.com\/cnnnext\/dam\/assets\/200403112357-oil-storage-tank-russia-0322-restricted-large-169.jpg\"><br \/>\nThe heavy dependence on foreign supply has spurred Beijing to focus on ways it can prevent energy shortages. In addition to requiring state-owned oil companies to increase production, the country has spent years working to increase the amount of oil it keeps in reserve.<br \/>\nThe reserve is especially important, given how much domestic production lags behind imports. Last year, China produced 191 million tons of crude oil, according to CNPC, less than 30% of its annual consumption.<br \/>\n&#8220;It has become more clear that China should \u2014 and will \u2014 pay more attention&#8221; to increasing its reserves, Ip said.<br \/>\nThis year is also supposed to mark an important milestone for China&#8217;s oil reserves. By the end of 2020, the country wants to have 85 million tons of oil in its emergency stockpile. That&#8217;s almost as much as the United States keeps in its Strategic Petroleum Reserve \u2014 the world&#8217;s largest backup oil supply.<br \/>\n<img decoding=\"async\" alt=\"China depends on foreign oil. The Saudi attack is a wake-up call\" class=\"media__image\" src=\"\/\/cdn.cnn.com\/cnnnext\/dam\/assets\/190918101737-china-oil-tanker-file-large-169.jpg\"><br \/>\nEven government researchers in China have pointed out the fortuitous timing of last month&#8217;s crash.<br \/>\nThe country needs to &#8220;seize the opportunity of super-low oil prices&#8221; and expand its strategic oil reserve before prices rise again, according to an article published in state media last month by Wang Li, a researcher for the Ministry of Commerce.<\/p>\n<h3>A closing window of opportunity<\/h3>\n<p>Beijing already appears to have started stocking up. China bought 44.9 million tons of crude in March, up significantly from February&#8217;s 11-month low of 39.8 million tons, according to Refinitiv. The data provider expects April&#8217;s imports to match or exceed last month&#8217;s.<br \/>\nThe amount of crude that China bought in March nearly rivaled what it was buying before the coronavirus pandemic broke out, even though the crisis depressed industry in the country.<strong> <\/strong>The amount of power generated each day in China by mid-March was around 80% of pre-coronavirus levels, for example. And air passenger travel last month was less than half of what it was before the pandemic.<br \/>\nIt is possible some of that cheap crude might be going into the country&#8217;s strategic reserve \u2014 China is notoriously secretive about its emergency supply, making it difficult to know exactly how and when it is stocked.<br \/>\nBut the reserve may not be the only reason China wants more oil right now. As the country emerges from the worst of the coronavirus pandemic and tries to restart<strong> <\/strong>its economy, it is going to need more oil. Factories are starting to open up again, and cars are returning to the roadways as lockdowns are lifted.<br \/>\nDomestic refineries are also reopening along with the rest of the coronavirus-stricken economy, meaning that they can now process foreign crude again, said Yan Chong Yaw, director of oil research and forecasts in Asia at Refinitiv.<br \/>\n<img decoding=\"async\" alt=\"China is trying to revive its economy without risking more lives. The world is watching\" class=\"media__image\" src=\"\/\/cdn.cnn.com\/cnnnext\/dam\/assets\/200318094832-01-china-return-to-business-0313-large-169.jpg\"><br \/>\n&#8220;China&#8217;s industry is coming back to life, and they need oil and lots of it,&#8221; said Stephen Innes, chief global market strategist for Axi Corp.<br \/>\nIn his article last month, Wang, the Ministry of Commerce researcher, noted that barrels trading below $30 are &#8220;abnormal&#8221; and unlikely to last long. Brent has already crept back up above that mark, and US oil last week got a boost on expectations that big production cuts could be on the way.<\/p>\n<ul><\/ul>\n<p>OPEC, meanwhile, is expected to meet with Russia on Thursday to discuss supply cuts and ending the price war, which could give oil prices another boost.<br \/>\n&#8220;There&#8217;s a solid chance we get an OPEC deal this week,&#8221; Innes said. &#8220;When the going is cheap,&#8221; he added, it&#8217;s wise to take advantage of the dip.<br \/>\nSource: <a href=\"https:\/\/edition.cnn.com\/2020\/04\/08\/business\/oil-prices-china-imports\/index.html\" target=\"_blank\" rel=\"noopener\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Hong Kong (CNN Business)Oil is cheaper right<\/p>\n","protected":false},"author":3,"featured_media":138326,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23051],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - 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