Market Insights > First Look

First Look - Chinese refining throughput falls to year-to-date low

Oil is trading higher, around $79, extending gains from last week
- Prices rallied more than $3 last week, with the first higher weekly settlement in three weeks
- A ship in the Red Sea was struck by a missile on Saturday, adding to the risk premium in crude prices
Chinese oil refining falls to year-to-date low (BBG)
- Driven by refinery maintenance, oil processing in China has fallen sharply to the lowest level so far this year
- China processed 14.31 MMBbl/d in May, a slight drop from April
- While a significant amount of maintenance is occurring, refiners have shut more units than usual as they deal with weak refining margins, with overall processing rates potentially declining this year

Natural gas for July traded lower Monday morning, gapping down overnight about 6c to $2.82/MMBtu
- Weather models shifted a little cooler over the weekend, resulting in about an 8.3 CDDs loss of demand from Friday (CWG)
- However, forecasts continue to show a record-hot 15-day U.S. outlook
- Lower 48 gas production edged higher over the weekend to about 100 Bcf/d, with increases coming from the Permian, Haynesville, and Appalachia (Criterion)
The Mountain Valley Pipeline (MVP) entered commercial operations on Friday
- Flows onto MVP from Equitrans surged to between 200 and 400 MMcf/d
- However, criterion research points out that the first few days of nominations on the MVP electronic bulletin board (EBB) didn’t quite tie out to the opposite side of the flows on Transco
  - The MVP website showed 0.1 Bcf/d of downstream delivery to Transco yesterday, while Transco’s posting indicated MVP receipts of 0.4 Bcf/d on Sunday
- The long-awaited MVP pipeline will allow Appalachia to eventually increase supply in the region by 2 Bcf/d, the size of the pipe, but likely not until 2027 when Transco completes downstream upgrades and expansion on the Transco mainline