Oil Daily | Weak Chinese Manufacturing and Potential OPEC Easing Depress Oil Prices

【Global Oil Supply and Demand】

Weak Chinese manufacturing and potential easing of OPEC production cuts have depressed oil prices. The Chinese PMI contracted for a fourth consecutive month, with new orders and employment remaining weak. Analysts suggest more economic stimulus is needed for China to improve its economic outlook.

A private PMI assessment for small export companies showed modest improvement in Chinese manufacturing. The Caixin China General Manufacturing PMI rose slightly, signaling a minor recovery. However, analysts believe substantial economic stimulus is necessary for China to turn its economic corner.

【Oil-Producing Countries Dynamics】

Guyana's real GDP surged 49.7% in the first half of the year, led by a 67.1% growth in the oil and gas sector. Oil production began in 2019, and the Stabroek Block, operated by Exxon, Hess Corp., and China’s CNOOC, has become a major growth engine, with output potentially reaching 1.6 million barrels daily by 2030.

A possible partial reversal of OPEC production cuts has been floated, with members potentially adding 180,000 bpd to total production starting in October. The possibility, however, depends on oil prices being sufficiently high. OPEC's output decisions are influenced by supply disruptions in countries like Libya.

【Industry News】

The Aphrodite gas field consortium offshore Cyprus submitted a $4 billion development plan to the government. The project involves an independent floating production facility, with peak production expected at 800 million cu ft of natural gas per day. The gas will be sent to Egypt and potentially converted to LNG for global export.

Development of the Aphrodite field was delayed due to negotiations over the production sharing scheme. With the settlement of these negotiations, development plans can move forward. This progress may also positively impact other gas discoveries offshore Cyprus, such as the Glaucus and Calypso fields.