SINGAPORE: According to traders and market consultancies, China’s oil refinery utilisation rates are falling from log third-quarter levels as dwindling margins and a lack of export quotas prevent plants from increasing output for the remainder of 2023.
The decrease in refining output may lower simplistic demand from the top importer in the world and cap world oil prices, increasing China’s crude inventories and lowering prices from Russia, a major supplier.
According to consultancy FGE, run-offs at small independents known as teapots and state refiners are the main reason why China is expected to process 15.1 million barrels per day( bpd ) in November as opposed to 15.37 million in October.
According to Mia Geng, head of China oil study at FGE, state refiners may be considering residual work cuts due to the limited export quotas left for the remainder of this year.
On top of that, due to declining need, we are currently witnessing stock builds for transport fuels.
State refiners see little opportunity to increase capacity as Beijing is unlikely to issue more gas export permits this year, despite the fact that they had previously profited from beneficial fuel imports.
An established at a Sinopec factory who declined to be named added that his plant is trimming runs by around 20, 000 bpd this month to the lowest level this year.” Margins are about disappearing as we’re processing higher-priced crude while demand for refined fuel is weakening.”
” Bad professional demand for petroleum is doing us no good.”
In order to achieve an average of 15.65 million bpd in the third quarter, Consultancy Energy Aspects reduced its forecast for China’s purification goes in November and December by 100,000 BPD.