*Oil Balanced on Competing News*
The US increase in virus cases is causing concerns for the recovery of demand for oil and more generally of attempts to return life around the globe to normal. The second wave of virus cases has put in doubt plans by many states to further relax lockdown measures, delaying further a return to normality of the one of the largest oil consuming countries in the world. However, there are signs of life with the EIA reporting a 4.8 million bbls draw in gasoline last week, in a sign that American demand is starting to pick up again.
*Libya Back in the Game*
It was announced yesterday that the National Oil Corporation of Libya had lifted force majeure on the Es Sider oil facility. However, things have not returned to normal as production is still being prevented, as armed guards are stopping loadings. Libya’s production has dropped from a pre-civil war level of 1.6 million bpd to a mere 100,000. In a time of a crude glut this has been music to the ears of other producers, but with increasing prices and the potential for increase in Libyan production, they could be back again soon.
*Crude El Mexicano*
The US has increased it crude imports from Mexico to 8 year highs. Levels rose from 834,000 bpd to 1.3 million at the start of July, levels not seen since February 2002. Mexico had agreed to be part of the OPEC+ cuts, committing to 100,00 bbls, far less than the 25% from other members. Without these extra cuts they have had extra production to offload and that has found its way into the arms of American refiners.
*Shandong Refiners at New Record Rate*
The independent refineries in Shandong province pushed up their run rates to 79% in June. This was over 1% higher than the previous month, as the area recovered from lockdown and huge imports of crude needed processing. We noted previously the queues of tankers awaiting discharge, something that has pushed up crude imports 7% from May.
*First Chinese Export Licence*
Zhejiang petroleum & Chemical Co has been granted China’s first private licence to export refined oil products. Exports will still be limited by a government quota, but it is a move towards a change in prospects whereby China could before a significant exporter of key refined products.