FX.co ★ Supply of US oil to increase in China

Supply of US oil to increase in China after the revision of the US-China trade deal signed in January.

This is because state-owned oil companies in the country have pre-ordered tankers to carry at least 20 million barrels of US oil in August and September.

China was the largest oil buyer in the United States since 2018, but then trade tensions erupted between the two countries.

Thus, in January, US and China signed a treaty, with which China pledged to purchase $ 18.5 billion in energy products, including crude oil and natural gas.

However, due to the coronavirus, purchases through June 30 only amounted $ 2.06 billion.

But recently, there has been a surge in purchases by China's state-owned oil and gas company PetroChina and its largest refinery, Sinopec Corp.

As Reuters reports, the review of the US-China trade agreement, originally scheduled for Saturday, will be delayed due to scheduling issues. However, a new date has yet to be agreed.

Nonetheless, according to Refinitiv Eikon, the monthly record for US oil production of 32 million barrels will be delivered to China in August.

Two Chinese companies have reserved five to six supertankers, each of which can hold 2 million barrels of oil, for shipment in August and September.

PetroChina plans to buy 3 million tons (about 22 million barrels) of oil from the United States by the end of the year, or nearly $ 1 billion.

"Demand in China has increased since COVID-19 restrictions were lifted," an Equinor spokesman said.

According to Emma Lee, senior crude oil analyst at Refinitiv, PetroChina has booked about 10 million barrels of US oil to be delivered in August and September.

"China currently favors US oil, which supports US markets and possibly contributes to weakening oil markets in Europe and Asia," said Scott Shelton, energy specialist at United ICAP.

Meanwhile, other goods from the US have also been purchased by China recently..

On Thursday, China signed an agreement to purchase 197,000 tons of soybeans from the United States.