Sat. Jun 22nd, 2024

China Slowdown, Oil Output Cuts in Focus at Key Energy Industry Events

China’s tepid economic growth and a possible extension of oil output cuts from top exporter Saudi Arabia are set to dominate discussions as global energy executives and officials gather on September at two major industry events in Singapore.

For the first time, the Asia Pacific Petroleum Conference (APPEC) and Gastech will take place in the same week, creating what will be the largest energy sector gathering in Asia since the pandemic.

China’s sluggish post-COVID growth, which has curbed fuel and petrochemical demand, will loom large over both events, while concerns about LNG supplies ahead of the northern hemisphere winter are set to dominate talks at Gastech.

Hopes for a rapid recovery in the world’s biggest importer of crude, and second largest buyer of liquefied natural gas (LNG), are fading fast amid elusive policy support, and its record oil inventories key factors in capping global oil prices and Asia’s spot LNG prices.

To support oil prices, top exporter Saudi Arabia could extend voluntary output cuts for a fourth month in October, leading supply cuts from major producers’ group OPEC+, a move that Russia’s Deputy Prime Minister Alexander Novak said Moscow was also considering.

Despite this uncertainty, Amrita Sen, co-founder of consultancy Energy Aspects said, traders were largely bullish on crude prices but wary of a correction to refiners’ profit margins after a recent rebound due to refinery outages and falling inventories.

“The single biggest question is around product cracks and when is it going to come off?” Sen added.

India and China, for the first time, became Russia’s top oil clients after the Ukraine war led to sanctions and a reshuffling of global crude trade that has led to the use of currencies other than the U.S. dollar for payments including the Chinese yuan and United Arab Emirates dirham.

Russian oil exports have continued despite prices rising above price caps as the West is keen to maintain global supplies and keep prices down. Meanwhile, U.S. sanctions on Venezuela look poised to ease, improving global supply while abundant and cheap Iranian oil heads for China.

“Heightened risk of geopolitical shocks is placing energy security as a priority for governments across the globe again,” energy analyst Saul Kavonic said.

LNG buyers from China and Japan to Thailand and Bangladesh scurried to lock in supplies this year after Asia spot prices cooled from record levels, reviving long-term deals as countries prioritise energy security.

But looming industrial action at Australian LNG plants has added fresh uncertainty as markets head into winter.

While the balance in global LNG markets remains delicate, the longer term demand outlook is uncertain as big importers including Japan and Europe aim to reduce the use of fossil fuels.

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