Market Insights > First Look

First Look - Chinese refiners slowing down after decades of growth

Oil heads for first higher weekly settlement in three weeks, up more than $3.50 this week
- BP’s Whiting refinery plans to undergo maintenance in late July, with work expected to last through September
  - This could have a negative impact on Canadian heavy crude, which the refinery receives large volumes of
- Iraq likely overproduced their OPEC quota in May, according to secondary sources
Chinese oil refiners slowing down after decades of growth (BBG)
- China’s multi-decade boom in refinery processing growth could be faltering, a potential blow to global demand
- China has grown to be the world's largest consumer of crude oil, but the IEA expects Chinese demand to be flat or decline for the first time since 2004, excluding 2022 due to China’s Covid-Zero policy
- A prolonged property crisis has weighed on China’s economic outlook and reduced demand for refined products
- If Chinese demand does end up weakening, it could impact OPEC’s decision to bring back some crude volumes to the market

Natural gas prices edged lower in Friday morning trading, down just over 1% to $2.93 at 8:00 AM CST
- Gas prices lost ground yesterday after the EIA reported an injection in underground storage that came within expectations
- Overnight weather model changes showed a small CDD (cooling degree day) increase, not enough to push gas into the green on Friday AM trading
The EIA reported a natural gas injection of 76 Bcf to underground storage for the week ended June 7
- The storage build aligned close with the average analyst estimate of 74 Bcf
- Total working gas inventories increased to 2.974 Tcf, which is 364 Bcf higher than last year for the same week and 573 Bcf higher than the five-year average of 2.401 Tcf
- AEGIS notes that for gas to rally against the backdrop of over half a Tcf surplus to the five-year average, production likely needs to stay below 100 Bcf/d, and weather anomalies need to keep warm
  - Our weather-adjusted supply-demand model only showed minor undersupply to the five-year average for last week’s inventory print. This means that even with Lower 48 production near 98 Bcf/d, the market ex-weather was balanced