China's demand is expected to constitute an upward pressure on oil prices

Under the background of increasing self-sufficiency of US crude oil, the demand of China, the world’s second largest demander of crude oil and potential future largest importer of crude oil, will have an important impact on international oil prices.

The US Energy Information Administration (EIA) has stated in its short-term energy outlook report that China is the main source of expected growth in global oil consumption. From 2004 to 2012, China's crude oil demand increased by an average of 520,000 barrels per day, which is the main driver of global crude oil demand growth over the past decade. According to the latest data released by the China Bureau of Statistics, GDP in the second quarter of this year increased by 7.5% year-on-year, down from 7.7% in the first quarter. At the same time, data from the General Administration of Customs of China showed that China’s crude oil imports amounted to 22.17 million tons in June this year, and cumulative imports from January to June were 138 million tons, down 1.4% year-on-year. Given expectations of a slowdown in China’s economic growth, international energy agencies including the International Energy Agency (IEA) and OPEC believe that the slowdown in China’s economic growth will lead to a slowdown in the pace of China’s crude oil demand growth, and will affect crude oil prices in the second half of the year. The trend caused some downward pressure.

US shale oil production continues to grow Unconventional oil and gas resources such as US shale oil and Canadian oil sands will continue to impact the North American crude oil market. Due to the development of horizontal drilling and fracturing technology, U.S. crude oil production began to recover in 2009, and there has been a tendency to accelerate growth since 2012. The United States' crude oil imports are currently at the lowest level in 16 years and are expected to reshape the global oil trade pattern. With the further increase of domestic crude oil production and the slowdown in demand growth, the demand for external crude oil imports will continue to show a downward trend. In June 2013, US net crude oil imports fell to an average of 7.9 million barrels per day. It is expected that the US crude oil imports will further decrease in 2014. Recent news reports that in response to the explosive growth of shale oil in the United States, OPEC is likely to reduce oil production at the December output meeting. If it does, it will be OPEC's first for five years.

The current situation of high crude oil inventories in the US is difficult to change in the short term. Despite being supported by seasonal demand, U.S. crude oil inventories have fallen by about 30 million barrels since the end of June, but overall, U.S. crude oil inventories are still at a record high of 364 million barrels. , and above the 5-year average. EIA predicts that crude oil inventories in the second half of this year will be the highest level in the same period in the past five years due to the increase in domestic crude oil supply.

Overall, we believe that oil prices will continue to operate at high levels due to seasonal factors. The recent sharp decline in U.S. crude oil inventories indicates that the fundamentals are strong. After all, historically, the weekly crude oil inventories have been reduced by more than 5 million barrels, so the bubble component of oil prices is not much. At present, the price of oil has been adjusted, but it is not ruled out that the price of oil will rise again in August. However, in the medium to long term, due to the current stable supply of global crude oil and the slow recovery of the global economy, the demand for crude oil has been growing at a relatively weak rate. Therefore, the long-term basic support for oil prices is rather limited. With the end of the seasonal demand effect of crude oil in the third quarter, there is little room for further upward movement of oil prices. We expect the future low of oil prices to be likely to occur in October and November in the fourth quarter. This is mainly due to the fact that supply growth is greater than demand. The effect of growth.