Crude closed higher yesterday and is continuing its gains in early trading this morning. News out of China of increased quotas for next year and OPEC+ chatter around continuing supply cuts into the first quarter are helping to lift markets this morning.
China’s Ministry of Commerce announced a 20% increase in the quota for use of overseas oil by non-state entities next year. With the background of decreased demand and falling prices, China is taking advantage of favorable economics to purchase more crude. While in the US and Europe, utilization rates for refiners have been low this year, the utilization rates for China’s private “teapot” refiners has been increasing. The 20% increase in the import quota is equivalent to about 823,000 barrels a day.
In OPEC+ news, Russian oil companies and Russian Energy Minister Alexander Novak have been in discussions focused on whether to continue OPEC+ supply cuts into the first quarter of next year. Saudi Arabia has continually reaffirmed its determination to keep markets balanced. The return of Libyan barrels to the market have added pressure to OPEC+ for the need to rebalance the market. Traders are hopeful that OPEC+ will choose to continue current supply cuts of 7.7 MMbpd into next year.
In early trading today, crude prices are up. Crude is currently trading at $38.10, a gain of $1.29.
Fuel prices are up this morning. Diesel is trading at $1.1321, a gain of 2.0 cents. Gasoline is trading at $1.0795, a gain of 2.8 cents.