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Jump in Chinese crude imports


China’s November crude imports were sharply up from October’s 15-month low, rising 0.9mmb/d (+19%) MoM (+1% YoY) to 5.7mmb/d according to preliminary data published by the PRC’s General Administration of Customs. On a YTD basis, crude imports have averaged 5.5mmb/d, up 3% (or 0.2mmb/d) YoY.

The rise in crude imports meant that implied demand as calculated under the crude-side methodology (net crude and product imports plus crude production) also rose, up 1.0mmb/d (+11%) MoM to 10.1mmb/d in November (-1% YoY), assuming domestic crude production remains at October’s production level. Implied demand under this methodology has averaged 9.9mmb/d YTD, up just 2% YoY, and half the 4% YoY growth forecast by the IEA for 2013. However, we believe 2012 was marked by significant stock building relative to 2013 which would drag the apparent YoY growth lower.

Net managed money futures and options positions on the ICE in Brent, regarded as the most directionally driven speculative category, rose 1.3%, or 1,655 positions to 131,416 positions, in the week ended 3 December. Total Open Interest for futures and options increased 1.5% WoW. Over the same period, Brent gained USD 1.74/bbl WoW to USD 112.62/bbl.

On the other side of the Atlantic, net managed money futures and options positions on NYMEX in WTI rose more sharply, up 7.8%, or 17,842 positions, to 246,661 positions, taking speculative net longs to a 6-week high. WTI closed the week ended 3 December higher, up USD 2.36/bbl WoW to USD 96.04/bbl, taking the discount to Brent to USD 16.58/bbl. The WTI discount to Brent has since narrowed to around the USD 12/bbl mark.

OPEC, which in its recent meeting rolled over its 30mmb/d production target (see Morning Comment of 6 December) is due to publish its Monthly Oil Market report today. The EIA is also scheduled to release its Short-Term Energy Outlook today while the IEA publishes its Oil Market Report tomorrow.

Colin Smith, Marc Jacouris
VTB Capital analyst

China, oil, IEA, OPEC

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