China Trade Downturn : China’s trade downturn lowers oil prices, but restricted supply offsets it. China’s July trade numbers dropped, sending oil prices soaring. This increased concerns about the global economy’s future. Despite the uncertain future, restricted supplies kept oil prices from falling further.
Brent oil cost $85.05 at 06:41 GMT. The price dropped 29 cents or 0.34 percent. The European counterpart to U.S. West Texas Intermediate oil closed at $81.69 a barrel: twenty-five cents or 0.31% less.
In July, China’s imports dropped 43.69 million metric tons, or 10.29 million barrels per day, according to the General Administration of Customs. In July, imports fell 18.8% from June. The same period last year saw a 17% rise.
China’s imports fell 12.4% and exports 14.5% from the year before. Exports fell record-fast. Fastest since February 2020. This decrease’s size is unclear to experts.
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Ignoring the lousy information revealed the good. From August through October, analysts remained optimistic about China’s gasoline needs. They were confident since crude oil processing remained constant regardless of the economy.
Building and industry will be busy in September. People want to use more fuel. A clever CMC Markets analyst, Leon Li, thought summer travel would increase demand. He conceded that October’s peak demand may decline.
Two huge oil firms have a supply relations story. A major maritime participant, Saudi Arabia, expressed worries about long-term output cuts. The monarchy excitedly promised to cut oil output by 1 million barrels per day until September. Surprises made this promise more intriguing, and there were hints that the scheme would extend beyond September or be more elaborate.
Russia said in September that it would cut oil shipments by 300,000 barrels per day.
Saudi Arabia’s stubborn refusal to increase output despite Brent’s rise beyond $80 a barrel raises questions about its strategy. Vivek Dhar, a Commonwealth Bank of Australia brilliant planner who handles mining and energy commodities, wondered whether the kingdom had aspirations over $80. He asked whether their acts indicated ulterior agendas.
A Reuters poll predicted U.S. oil and gasoline product inventory statistics while everyone waited. Crude oil would decline by 200,000 barrels, while gasoline would rise by 200,000.
Because of how much oil is accessible, how much people desire it, and how it is exchanged throughout the globe, the future of oil continues to alter despite economic development.
Our Reader’s Queries
Why are China’s exports falling?
The demand for Chinese exports has taken a hit due to the Federal Reserve and central banks in Europe and Asia raising interest rates to combat inflation. This has resulted in a meager 0.03% increase in total trade for January-October, as per the latest data released on Tuesday.
Why is the Chinese economy falling?
The pandemic’s strict travel and activity restrictions have had a significant impact on manufacturing and transport. This, coupled with job losses resulting from the crackdown on the technology sector and a downturn in the property industry, has caused many Chinese citizens to become more frugal with their spending.
Is China running a trade deficit?
China’s trade surplus for November 2023 reached an impressive 68.40 USD Billion, according to Trading Economics’ global macro models and analysts’ expectations. As we approach the end of this quarter, the balance of trade in China is projected to be 64.00 USD Billion. This is a positive sign for China’s economy and its global trade relations.
What is the problem with trade with China?
Bilateral trade flow is impacted by various factors, including China’s industrial policies that favor state-owned enterprises, disagreement on China’s WTO obligations, and inadequate protection of U.S. intellectual property rights. These issues have a significant impact on the trade relationship between the two countries.