China Opens Its Fuel Reserve to Stabilize Prices
November 1, 2021
China said they were releasing products from the state fuel reserve to try and help prevent a diesel shortage. They also were going to release some gasoline as well to try and help stabilize prices. Diesel supplies have been drawn down as more of it has been in use in place of coal and natural gas for electricity generation. Coal and natural gas prices have skyrocketed which has caused switching to more diesel.
China’s manufacturing sector has seen a pronounced mid-cycle slowdown, or possibly even a recession. Some of this is the result of the energy shortage forcing many factories to slow down or even shut. The official purchasing managers’ index fell to 49.2 in October from 49.6 in September and a recent high of 52.1 in November 2020.
Both Chevron and ExxonMobil said they expect to increase drilling in the Permian Basin this quarter. With crude oil above $80 per barrel, the market should expect a little more drilling. But the current outlook is still for the crude oil market to remain tight until year-end.
JPMorgan Chase & Co’s global head of commodities research and strategy, Natasha Kaneva, said: “OPEC is still firmly in the driving seat for the year 2022.” She said OPEC and its allies will continue to hold sway over the oil markets as supplies from other sources fail to increase much.
Baker Hughes reported that oil rigs were up one to a total of 444 rigs. Last year at that time there were only 221 crude oil rigs.