Oil Daily | China's Oil Refining Hits Three-Month Low Amid Rising Electrification and LNG Demand

【Global Oil Supply and Demand】 Crude oil refining in China dropped to a three-month low in September due to seasonal maintenance, with a 1.6% decrease since the year's start. China's refining processed 58.73 million tons of crude oil, while demand for gasoline and diesel is challenged by growing electrification and LNG-powered vehicles. China's coal production and imports surged, with September imports hitting an all-time high of 47.59 million tons. Oil imports dipped to 45.5 million tons, down 7.4% from the previous month. Analysts predict steady crude imports at around 11 million barrels daily through Q4, with modest demand growth. The International Energy Agency forecasts China's contribution to global oil demand growth to decline significantly, from up to 70% in recent years to just 20%. Overall global demand growth is expected at 900,000 barrels per day, down from over 2 million in previous years. Europe's exposure to LNG trading has increased its vulnerability to gas supply shocks, particularly with tensions in the Middle East affecting market stability. Europe's gas storage is 95% full, but concerns remain over winter needs and competition with Asia for LNG supply. 【Oil-Producing Countries Dynamics】 Mexico's Pemex is reducing its upstream budget by 20%, impacting short-term crude production. Production could drop by 5,800 barrels per day due to cutbacks in well repairs and contracts. The company faces financial difficulties, including rising debt and delayed vendor payments. Libya's Oil Ministry denied rumors of National Oil Company head Farhat Bengdara's resignation. Bengdara was a compromise appointee amid political disputes. Libya's oil production has recovered to 1.3 million barrels per day after resolving a central bank dispute affecting revenue control. 【Latest Oil Policies】 The UK imposed extensive sanctions against Russia's shadow fleet, targeting additional oil and LNG tankers to curb energy revenues. Despite sanctions, Russia continues to circumvent measures, with many blacklisted tankers resuming operations to transport Russian oil. Mexico's Senate passed constitutional amendments favoring state-owned CFE in electricity dispatch. This aligns with President Claudia Sheinbaum's policies supporting state energy firms like Pemex, despite challenges in increasing oil production due to underinvestment. 【Industry News】 European renewable electricity prices in power purchase agreements declined by 12.4% in Q3 2024 due to moderating inflation and market stability. Corporate buyers are increasingly securing long-term green energy deals amid a surge in renewable capacity installations. Europe's surge in renewable power led to negative wholesale electricity prices, slowing investment in capacity additions. This highlights the need for higher energy storage investment to manage supply-demand mismatches, as reported by Reuters.