Hundreds of oil and gas traders, hedge fund managers, producers and analysts will fill high-end bars and hotels in Singapore this week, hoping to answer one question: Is China really back?
The past months have been a roller-coaster, with gas swung by Australian strike threats and continuing fallout from the war in Ukraine, and crude by OPEC+ supply cuts — all accompanied by global efforts to rein in inflation.
But it’s the health of China’s economy that will be animating the largest Asian gathering of the oil and gas community since Beijing began easing draconian Covid restrictions late last year.
Take gas. Last year, high prices, an economic slowdown and pandemic restrictions dashed China’s liquefied natural gas imports, providing relief for the rest of the world reeling from the energy crisis.
When Covid Zero measures were eased, the market prepared for a rush of Chinese LNG spot buying in 2023 — pitting the nation against a Europe racing to replace Russian pipeline deliveries. The International Energy Agency warned of global shortages triggered by Chinese purchasing.
That hasn’t really materialized
China’s LNG imports for the first eight months of 2023 were up 11% from the same period last year but still aren’t at 2021 levels, when the nation was the biggest buyer of the super-chilled fuel. And new long-term contracts helped cover much of that annual increase.
Now, with winter on the horizon, China is the multibillion-dollar question once more. Moves to secure shipments for the coldest months risk upsetting a delicate global LNG supply balance and jolting prices — at a time when Australia has roiled European gas futures.
But again, with Asian LNG prices down 75% from this time last year, it appears that traders aren’t betting on a sudden Beijing shopping spree.
For optimism, the Singapore crowd can at least turn to oil.
Trafigura Group is among those seeing the glass half-full in the largest crude importer. The property market is bad, says co-head of oil trading, Ben Luckock, but there are parts of the economy doing far better. Others see strong gasoline consumption and sustained refinery runs, even if much of that is driven by exports and Brent crude is challenging $90 a barrel.
Source:https://www.bloomberg.com/