Crude oil prices were observed to be bearish with a decline of 1.7% for the week ending September 16. The situation in China remains a major weighing on the sentiment, where in its latest effort to curb the spread of Covid, the world's second-largest oil-consuming nation has urged hundreds of millions of people who normally travel during the Mid-Autumn Festival - which falls on September 10 this year - to stay at home. Travel activity carried out during China's 3-day Mid-Autumn Festival fell by more than a third compared to last year, state media reported on Monday (12/9). The number of trips by land, sea, and air decreased by 37%, 15%, and 60%, respectively compared to the same holiday period last year. Local authorities have also urged residents to refrain from non-essential travel ahead of the week-long National Day holiday in early October and the Communist Party Congress in mid-October.
Another looming sentiment is the latest projections from the International Energy Agency (IEA), which predict the Covid-19 lockdown and property crisis in China could potentially weigh on economic growth and push the world's second-largest oil-consuming nation to experience the biggest annual decline in oil demand in more than three decades. China's oil demand is projected to fall 2.7%, or 420,000 bpd this year, the first annual decline since a 1% decline in 1990, the IEA added. However, the IEA said the decline of China was offset by an increasing shift in the use of natural gas to oil for heating, averaging 700,000 bpd from October 2022 to March 2023.
Signals of the threat of global economic growth were also reinforced by statements from World Bank President David Malpass, who on Thursday (15/9) said that the world is currently heading for a global recession, which was triggered by central banks around the world simultaneously raising interest rates to dampen interest rates Inflation spike. Malpass also warned that the current state of economic growth, which has touched its steepest slowdown since 1970, has the potential to slow further, with global core inflation rates, excluding energy, holding around 5% in 2023, nearly double the average of five years Inflation before the pandemic.
Chengdu Implements New Normal From 19 September
Following the lifting of the lockdown on Sept. 15, the southwest Chinese city of Chengdu plans to resume production and normal life from Monday (19/9), a statement from the Chengdu city authority said on Sunday. The news sparked optimism for renewed economic activity in China's sixth-largest city with the third-largest GDP ranking, which will also help boost fuel demand with the resumption of public and private transport. Overall, China reported 990 new infections on September 18, down from 1,189 the previous day.
Nigerian Oil Supply Potential to Drop
Vessel Bonga in Nigeria, which has a production and storage capacity of more than 200,000 bpd and 150 million cubic feet of gas per day, is scheduled to undergo maintenance in October, a spokesman for Shell Nigeria Exploration, and Production Company Limited (SNEPCo) said on Sunday. In its statement, SNEPCo did not say how long maintenance of the Bonga floating unit would take, which sparked fears of a decline in oil supplies from Nigeria in the near future.
USA - API Crude Oil Stocks Change
USA - API Gasoline Stocks Change
USA - EIA Crude Oil Stocks Change
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Source: ICDX Research