As Oil Hits $70, Warning Lights Flash Up In Asia
SINGAPORE, Jan 12 (Reuters) - Oil prices have risen above $70 per barrel for the first time since 2014 as investors bet supply cuts led by OPEC will dominate the market this year.
But some traders are sounding a warning - the world's biggest crude consuming region, Asia, is showing signs of an impending downward correction.
Prices for Brent crude oil futures, the international benchmark for oil prices, have risen by more than 50 percent since mid-2017 and hit $70 per barrel this week for the first since December 2014. Average Asian physical crude oil prices also moved over $70 per barrel in January.
"A healthy (price) correction could be on the cards," said Stephen Innes, head of trading for Asia/Pacific at futures brokerage Oanda in Singapore.
One reason, traders say, is that the supply of oil products remains ample. In the last three years, refiners enjoyed high profits because of relatively cheap crude oil, which is used to make fuels like diesel or gasoline.
As a result, Asian refiners processed an unprecedented 23 million barrels per day (bpd) of crude oil in late 2017.
China, by far Asia's biggest oil consumer, is now producing so much fuel that its refiners have turned to exports to find buyers. And their purchases of crude could fall.
Chinese diesel exports
Its total December refined oil products reached a record 6.17 million tonnes, according to customs data announced on Friday.
"This drop in margins could reduce Asian refiners' demand for incremental crude in the near term and weigh on global (crude) prices," said Sukrit Vijayakar, director of energy consultancy Trifecta.
Singapore refining margins
BMI Research said in a note this week: "In Q1, the balance of risk to Brent (prices) lies to the downside."
What Fueled The Rally
The crude market's focus has so far been on signs of tightening supplies as the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC) and Russia lead production cuts aimed at propping up prices.
12
View Full Article
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds
- ExxonMobil Racks Up Discoveries in Guyana Block Eyed by Chevron
- Oil Market Sentiment Has Improved Significantly
- EU, US Eye Collaboration on Nuclear Materials
- USA Driving Activity to Increase to All-Time Highs
- EU Electricity Export to Ukraine Up 94 Percent in Two Years
- China Coal Output Falls for First Time since Government Ordered More
- TC Energy to Sell Prince Rupert Gas Pipeline Project to First Nation
- BP Pulse Buys One of Europe's Largest Truck Stops
- UK CCUS Plans Outdated: Think Tank
- I Squared Eyes Full Ownership of Europe Gas Storage Firm
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- Rystad Looks at the Buzz Around White Hydrogen
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension