117 tankers carry cheap oil to China

According to Bloomberg data, 117 large tankers are heading for China with an average capacity of 2 million barrels and will reach Chinese ports from mid-May to mid-August.

China will receive 230 million barrels of oil in the coming months.

Besides, the convoy is said to be the largest shipment China has acquired in recent years. Moreover, the fleet of tankers is the biggest in the world by far.

Most of these shipments were purchased in the previous months. Prices at that time were lower than those of current ones. Many of the fleet’s oil shipments were purchased in April when oil prices were lower than the current levels, and West Texas Intermediate crude oil fell to a negative level. China bought oil from Alaska, Canada, and Brazil.

The country has recently reduced its demand for oil due to the proliferation of coronavirus. However, now China increased its purchases of oil as industries and refineries have begun to grow, and this could be a factor in rising oil prices. 

China benefited from low oil prices in the first quarter of 2020 to double its previous strategic reserves. Thus, by sending its oil imports to strategic reserves instead of reducing imports, China has somehow supported the oil market in the face of declining demand.

Shortage of oil in the market pushes the prices higher

Driving in Europe and the US is revitalizing. Saudi Arabia and Russia ended their price war and cut production. This helped oil prices to push up moderately in recent weeks. WTI oil futures gained 7% and rose to nearly $30 a barrel. Bjornar Tonhaugen, the head of oil market research at Rystad Energy, said that in May, traders could eventually sit back more comfortably and rest. However, the second half of 2020 will not have pre-crisis oil prices. The massive oil stock overhang must first be worked down.

China’s crude imports rose to 9.84 million barrels per day in April as demand for fuel increased, and refineries began operating.

Oil prices are nearly half of what they were at the beginning of this year. The average price of regular gasoline in the US is still at $1.88 a gallon. This is $0.98 less than a year ago. Energy experts suspect that oil prices may drop again if there is a second wave of a coronavirus outbreak. Governments have started allowing the economy to reopen and encouraging people to travel freely.