Russia Becomes China’s Largest Oil Supplier
March 21, 2023
After the aggressive sell off these energy markets haves seen they are likely to see a corrective bounce. Near term the markets are likely to see prices testing higher but at this point any move higher needs to be seen as corrective and another leg lower is still needed, especially in diesel to clear out some of the length in the market. The energy markets will be influence by three things over the next few weeks. First is the Fed decision on interest rates tomorrow. Second is the weekly inventory reports this week and third is the OPEC+ meeting on April 3rd.
The following is from the EIA monthly supply report. In 2022, the United States set a new record for petroleum products exports, up 7% from 2021. US petroleum products exports averaged 5.97 million bpd in 2022 (405,000 bpd more than in 2021) driven by an increase of 18% (193,000 bpd) in distillate fuel oil.
Yesterday was a volatile day with crude oil and refined fuels prices reversing early large losses to close higher. Prices were down in early trading due to the default fears even after the news that UBS, Switzerland’s largest bank, agreed to buy Credit Suisse in an attempt to rescue the country’s second largest bank. Crude oil broke the $65 level and was oversold which triggered buying near the end of the daily trading session.
Traders are getting more torn on whether the Fed will raise rates by 25 basis points, which was the consensus, to now some calling for no rate hike due to the current banking crisis. If the Fed doesn’t increase rates, it will likely be bullish for energy prices.
According to data from the General Administration of Customs, Russia overtook Saudi Arabia to be China’s top oil supplier in the first two months of 2023, as buyers bought sanctioned Russian oil at steep discounts.