Moody’s Downgrades China’s Debt Rating
December 6, 2023
The API inventories update called crude oil inventories up 594,000, gasoline up 2.8 million, and distillates up 1.9 million barrels.
The average estimates for today’s EIA report from the Bloomberg survey is for crude inventories to be down 568,000 , gasoline up 1.009 million, and distillates up 1.061 million barrels.
Crude oil and ULSD prices fell again yesterday by about 1% mainly due to energy analysts stating OPEC+ voluntary output cuts are unlikely to be significant. The API inventory report from above was also seen as bearish.
Rating agency Moody’s lowered the outlook for China’s A1 debt rating to “negative” from “stable”. This was the first downgrade on China’s rating since 2017. Moody’s cited cost to bail out local and state firms and control its property crisis would weigh down the world’s #2 economic growth going forward for several years.
The energy markets tried to rebound yesterday but struggled and ended the day lower. The markets are skeptical about OPEC+’s recent additional production cuts and the concern about China’s economy mentioned above is also a drag on energy prices. The sentiment is negative currently and putting down pressure on prices. But as has been mentioned, the US government’s target to buy more oil for the SPR at $70 offers some support and the end of the cease fire in Gaza which bring uncertainty to the Middle East is also a support.
Vladimir Putin will visit the United Arab Emirates and Saudi Arabia this week.
Moscow’s monthly income from oil exports is greater now than before the invasion of Ukraine, highlighting the failure of Western sanctions to curb its war chest. The punitive measures have fostered a lucrative business for scores of difficult-to-trace traders and shipping companies, and the final destination of the profits from selling their Russian fuel is a mystery.