Oil Daily | OPEC's Spare Capacity Caps Prices as China Boosts Demand Amid Russia Supply Concerns

【Global Oil Supply and Demand】

Analysts expect a well-supplied oil market this year, assuming no major supply disruption. OPEC's spare capacity is seen as a cap on price spikes. The impact of Biden's sanctions on Russian oil is uncertain, with some analysts predicting a price decline due to anticipated oversupply.

China's February manufacturing activity expansion suggests a bright demand outlook for oil. The purchasing managers' index rose to 50.2, surpassing expectations. This optimism is reflected in oil price increases. However, geopolitical tensions in Eastern Europe could affect energy market hopes for sanctions easing.

Liquefied natural gas imports to China fell to the lowest since 2020 due to warm weather and reduced industrial activity, making Japan the leading LNG importer. China's past surge in imports for storage replenishment has tapered off, with potential implications from tariffs on U.S. LNG imports.

【Oil-Producing Countries Dynamics】

Fires at Russian refineries, possibly from Ukrainian drone attacks, raise concerns about fuel supply stability. Despite shutdowns for repairs, there have been no significant disruptions in fuel export flows. Russian refinery runs increased earlier this year due to sanctions, but overall impact remains uncertain.

【Latest Oil Policies】

The introduction of U.S. tariffs on Canadian and Mexican imports could disrupt oil market dynamics, as Canadian oil makes up a significant portion of U.S. imports. Potential U.S.-China trade disputes may affect LNG flows, influencing long-term contractual supply agreements and U.S. export goals.

【Industry News】

China's slip to the second spot in global LNG imports reflects lower industrial activity and ample gas storage. A 15% tariff on U.S. LNG imports, in retaliation to U.S. tariffs, could reshape the energy trade landscape, with China possibly seeking alternatives to American LNG.

【Others】

Recent geopolitical tensions have impacted energy market dynamics, with a clash between Trump and Zelensky affecting peace prospects for Eastern Europe. European support for Ukraine might create positive signals for oil markets, though U.S. position uncertainties linger.