Wednesday, November 10, 2010

Chinese Imports of Crude Oil Decrease

According to Bloomberg, China’s crude oil imports in October of 2010 declined to their lowest level since May of 2009. This is especially surprising considering that in September of 2010 China recorded their highest amount of imports of oil at 3.8 million barrels of oil per day. Bloomberg News and JP Morgan analyst Brynjar Eirik Bustnes speculate that the reason for this sudden decline is due to the excess oil that was brought to China in September, which according to them lasted in to October. However, conversely China’s oil products imports that include gasoline and diesel rose for the third consecutive month to 840,000 tons.

This decrease in Chinese imports of oil brings several issues to mind including how this news will affect the world oil market. As well as, whether it will lead to an increase or decrease in gasoline prices at the pumps. I believe in the short term that as a result of this import decrease that gasoline will be cheaper to purchase than in the previous months. However, unfortunately for the American and global consumer, prices will most likely rise again as China begins to increase its imports. In addition, I think that from a macroeconomic perspective it will be interesting to see how the decrease in crude oil imports and increase in oil product imports will affect the global economy.
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2 comments:

  1. Nick LinsmayerNovember 10, 2010 at 11:35 PM

    It is interesting to see how the current economic conditions are creating such variation in inventory levels. Another example of this is present among high-tech electronics, especially high-tech Japanese electronics, which are expected continue to fall (even after already large dips in prices) in time for the holidays, according to the Wall Street Journal. However, the idea of a commodity, like oil, is a different prospect, considering there is no rush to get rid of oil inventory. Being that China is such a strongly growing economic force makes a shift in Chinese inventories especially notable. While this is a fairly large fluctuation, it is merely that, a fluctuation that is an exception rather than a rule.

    http://online.wsj.com/article/SB10001424052702304023804575566033937973108.html

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  2. Laurie LopezNovember 17, 2010 at 8:16 PM

    Interestingly, a decrease in demand for imported oil can help the economy. First of all, the price of oil can come down. The price of oil fluctuates by the decision of producers and by the political instability at the oil producing area. Just like Alex mentioned, I think that as a result of this import decrease, gasoline will be less expensive to purchase than what it has been costing lately. Still, just like Alex stated, unfortunately for the American and global consumer, prices will most likely rise again as China begins to increase its imports.

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