- Oil extends losses to trade around $75 amid ongoing Chinese demand concerns (As of 7:45 AM)
- WTI is near a seven-week low after concerns over demand in top importer China pressured prices lower
- China’s industrial profits grew at a faster Y-o-Y pace in June compared to May, indicating resilience in manufacturing (Reuters)
- However, China reported its weakest economic growth in five quarters, while oil imports fell 11% in 1H 2024 amid the slow return of refiners from maintenance
- Despite Chinese leaders' vows to support the economy, expectations for significant measures remain limited since the mid-July Third Plenum reiterated existing policies
- Furthermore, anticipation of key central bank meetings, including the US Fed, has kept oil prices subdued, with markets not expecting a rate cut this week but pricing in a 25 bp reduction for September
- Texas crude oil pipelines almost full to the brim, getting worse (Bloomberg)
- Crude oil pipelines from the Permian Basin to the Port of Corpus Christi are over 90% full, with congestion expected to increase to 94-95% by the second half of 2025, according to data from East Daley Analytics
- Meanwhile, US crude oil production is at a record high, with the Permian Basin contributing nearly half, but limited pipeline space could hinder exports
- Stalled US crude exports may cause domestic oversupply and global supply tightness, especially after the Russia-Ukraine conflict and OPEC+ cuts
- Alternatives include rerouting oil to the Houston area via OneOK’s Longhorn and BridgeTex pipelines, and an expansion of Enbridge’s Gray Oak pipeline system by 120 MBbbl/d could alleviate some congestion, though overall utilization may remain above 90%
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