Oil markets are struggling to reconcile geopolitics with fundamentals as headlines push prices one way while physical signals pull in the other direction. The result is a market where Brent spreads and gasoil cracks appear strong on paper, even as North Sea grades compete for premiums and US crude arrives at a discount in Europe. Markets are operating on a split screen, with futures signalling at least some tightness still, while the physical market has been weakening markedly. The paper structure has soli ...

Supply and Production - Russian petroleum product exports decreased in early September [1] - Drone attacks are curbing refining output [1] Export Trends - Diesel shipments experienced steep declines [1] - Naphtha shipments experienced steep declines [1]

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the oil industry in China, specifically analyzing July supply, apparent demand, and trade data for the country. Core Insights and Arguments 1. **Apparent Oil Demand Growth** - Chinese apparent oil demand grew by +5% YoY in July, averaging 16.4 million barrels per day (mb/d) [2][5][159] - Demand was driven by strong performance in the petrochemical sector, fuel oil, and jet fuel, with jet fuel consumption increasing by +15% YoY due to robust summer travel [2][26][159] 2. **Crude Imports and Refinery Runs** - Crude imports decreased by 1.0 mb/d MoM to 11.2 mb/d, influenced by higher prices from major suppliers like Saudi Arabia and the Atlantic basin [3][50] - Refinery runs declined by 300 thousand barrels per day (kb/d) MoM to 14.9 mb/d, although this figure is still up 7% YoY [4][56][118] 3. **Refined Product Exports** - Exports of gasoline, diesel, and jet fuel increased by 190 kb/d MoM, supported by strong refinery output and improving export margins [5][65] - Gasoline exports reached 250 kb/d in July, marking a 15% MoM increase [65] 4. **Diesel Demand Trends** - Apparent diesel demand showed a +2% YoY increase, but declined by 5% MoM due to seasonal factors and adverse weather conditions impacting construction activity [11][12][16] - The manufacturing PMI index fell to 49.3 in July, indicating weaker demand [8][12] 5. **Impact of New Energy Vehicles (NEVs)** - NEVs are displacing gasoline demand, with a penetration rate of ~55% in the domestic market [17] - The growth of NEVs is expected to slow down in 2026 due to potential cuts in subsidies and anti-involution measures [20][18] 6. **Jet Fuel Demand and Travel Activity** - Jet fuel demand reached a record high of 930 kb/d in July, driven by strong summer travel, with the number of trips expected to exceed pre-COVID levels [26][27] - Government policies, such as reduced fuel surcharges, are expected to further boost air travel demand [28] 7. **Fuel Oil and LPG Demand** - Apparent fuel oil demand rose by 195 kb/d MoM, supported by improved tax rebates for independent refiners [33][34] - LPG demand increased by 9% MoM, with imports rebounding as prices became more competitive [37][38] 8. **Crude Production Trends** - Chinese crude production fell by 170 kb/d MoM but showed a +1% YoY growth due to new field startups [48][50] 9. **Inventory and Stock Trends** - Crude stocks built by 21.8 million barrels in July, marking the fifth consecutive month of builds [148][150] - Observable product inventories increased by 9.0 million barrels, driven by strong refinery output [149][150] 10. **Future Outlook** - The outlook for diesel demand is expected to remain weak in August due to slowing export momentum [14] - Refinery runs are anticipated to increase in August as more capacity comes online and refining margins improve [115][126] Additional Important Insights - The manufacturing sector's slowdown is impacting diesel demand, with construction activity also affected by adverse weather [12][13] - The Chinese government is implementing measures to curb overcapacity in the refining sector, which may lead to the closure of smaller, less efficient refineries [127][128] - The overall refining capacity is expected to remain limited, with new projects needing to offset closures of older facilities [128] This summary encapsulates the key points discussed in the conference call, providing a comprehensive overview of the current state and future outlook of the oil industry in China.

Summary of China Oil Data Digest - July 2025 Industry Overview - The report focuses on the oil industry in China, summarizing supply, demand, and trade data for July 2025. Key Points Apparent Demand - Chinese apparent oil demand grew by +5% YoY in July, averaging 16.4 million barrels per day (mb/d) [2][5] - Demand was driven by strong performance in the petrochemical sector, fuel oil, and jet fuel, with jet fuel consumption increasing by +15% YoY due to robust summer travel [2][23] Crude Imports and Refinery Runs - Crude imports decreased by 1.0 mb/d MoM to 11.2 mb/d, influenced by higher prices from major suppliers like Saudi Arabia and the Atlantic basin [3][48] - Refinery runs declined by 300 thousand barrels per day (kb/d) MoM to 14.9 mb/d, but remained 7% higher YoY due to elevated run rates at state-owned refineries [4][54] Exports - Exports of gasoline, diesel, and jet fuel increased by 190 kb/d MoM, supported by strong refinery output and improving export margins [5][63] - Gasoline exports reached 250 kb/d in July, up 15% MoM, while diesel and jet fuel exports also saw significant increases [63][75] Diesel Demand - Apparent diesel demand softened MoM but showed YoY growth of +2%, marking the first time there were two consecutive months of positive YoY growth since March 2024 [10][15] - The decline in MoM demand was attributed to seasonal factors and adverse weather conditions impacting construction activity [11][12] LPG and Naphtha - Apparent LPG demand rose by +9% MoM, driven by improved demand from the petrochemical sector [35] - Apparent naphtha demand fell sharply by 14% MoM, reversing gains from June due to competitive pricing from LPG and ethane [38][43] Crude Production - Chinese crude production fell by 170 kb/d MoM but showed a steady YoY growth of +1% due to new field startups [46][48] Inventory Trends - Crude stocks built by 21.8 million barrels in July, marking the fifth consecutive month of crude builds, likely for strategic reasons [144] - Observable product inventories increased by 9.0 million barrels, driven by strong refinery output and soft domestic demand [145] Future Outlook - Jet fuel demand is expected to remain strong in August due to continued summer travel [29] - Diesel demand may face pressure from slowing export momentum and seasonal construction activity [13] - The independent refining sector is likely to see improved utilization rates due to better margins and increased capacity [121][122] Regulatory Environment - China has released two batches of clean product export quotas for 2025, totaling 34.2 million tonnes, with state-owned companies receiving the majority [87][88] Market Dynamics - The report highlights the impact of geopolitical factors, such as US sanctions on Iranian oil, affecting Chinese imports and refining strategies [49][50][52] Conclusion - The July 2025 oil data indicates a mixed outlook for the Chinese oil market, with strong demand in certain sectors like jet fuel and LPG, while facing challenges in diesel and naphtha. The regulatory environment and geopolitical factors will continue to shape market dynamics moving forward.

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **Chinese oil industry**, specifically analyzing June supply, apparent demand, and trade data for China. Core Insights and Arguments 1. **Apparent Demand Growth**: Chinese apparent oil demand grew by **5% YoY** in June, returning to the top of the 5-year range, driven by strong demand for naphtha, jet fuel, and diesel [2][3][6] 2. **Crude Imports Surge**: Crude imports increased by **1.2 mb/d** in June, with significant contributions from Saudi Arabia (+52% MoM) and Iran (+88% MoM) [4][54][55] 3. **Refinery Throughput**: Refinery throughput rose sharply by **1.2 mb/d** to **15.2 mb/d**, marking a record for June runs as state-owned refiners exited seasonal maintenance [5][61][62] 4. **Refined Products Exports**: Exports of refined products increased by **260 kb/d MoM**, with gasoline exports rising due to improved margins, although overall gasoline exports were down **16% YoY** [6][70][72] 5. **Diesel Demand Recovery**: Apparent diesel demand saw a **3% YoY** increase, marking the first month of positive growth since November 2024, supported by logistics sector demand [12][16] 6. **Jet Fuel Demand Growth**: Apparent jet fuel demand rose by **170 kb/d MoM**, driven by increased international travel and supportive government policies [28][33][35] 7. **Naphtha Demand Spike**: Naphtha demand surged by **415 kb/d MoM**, attributed to the high import tax on US LPG, making naphtha a more attractive feedstock [46][49] 8. **LPG Demand Decline**: Apparent LPG demand fell by **135 kb/d MoM** due to the impact of US-China tariffs, leading to a significant disruption in the market [41][45] 9. **Crude Production Increase**: Chinese crude production increased by **80 kb/d MoM**, reflecting seasonal trends and new field startups [52][54] 10. **Inventory Levels**: Crude stocks built by **13.5 million barrels** in June, reaching record levels, driven by high imports from Iran and Saudi Arabia [159][161] Additional Important Insights 1. **Manufacturing PMI**: The Manufacturing PMI rose to **49.7** in June, indicating slight improvement in manufacturing activity, although it remained in contraction territory [10][13][14] 2. **Impact of NEVs**: New energy vehicles (NEVs) are displacing diesel and gasoline demand, with NEV sales reaching a **53% penetration rate** in the domestic market [20][21][16] 3. **Geopolitical Tensions**: Ongoing geopolitical tensions, particularly between Israel and Iran, have affected crude buying patterns and may disrupt future imports [57][60] 4. **Independent Refiners' Challenges**: Independent refiners are facing challenges due to a shortage of crude import quotas and potential sanctions on Russian oil, which could disrupt their operations [137][138] 5. **Future Outlook**: The outlook for the independent refining sector remains troubled, with potential capacity reductions due to anti-involution policies and environmental regulations [138][139] This summary encapsulates the key points discussed in the conference call, providing a comprehensive overview of the current state and future outlook of the Chinese oil industry.

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **Chinese oil industry**, specifically discussing supply, demand, and trade data for June 2025. Core Insights and Arguments 1. **Apparent Demand Growth**: Chinese apparent oil demand grew by **5% YoY** in June, returning to the top of the 5-year range, driven by strong demand for naphtha, jet fuel, and diesel [2][3][6]. 2. **Crude Imports Surge**: Crude imports increased by **1.2 mb/d** in June, with significant contributions from Saudi Arabia (+52% MoM) and Iran (+88% MoM) [4][54][55]. 3. **Refinery Throughput**: Refinery throughput rose sharply by **1.2 mb/d** to **15.2 mb/d**, marking a record for June runs as state-owned refiners exited seasonal maintenance [5][61][62]. 4. **Refined Products Exports**: Exports of refined products increased by **260 kb/d MoM**, with gasoline exports rising due to better margins compared to diesel [6][70]. 5. **Diesel Demand Recovery**: Apparent diesel demand saw a **3% YoY** increase, marking the first month of positive growth since November 2024, supported by logistics sector demand [12][16]. 6. **Gasoline Demand Decline**: Apparent gasoline demand decreased by **8% YoY** in 1H 2025, attributed to the displacement by new energy vehicles (NEVs) [20][23]. 7. **Jet Fuel Demand Growth**: Jet fuel demand rose significantly by **11% YoY**, driven by increased international travel and supportive government policies [28][29][33]. 8. **Naphtha Demand Spike**: Naphtha demand surged by **23% YoY**, reaching an all-time record due to the high import tax on US LPG, making naphtha a more attractive feedstock [46][49]. 9. **Crude Production Increase**: Chinese crude production increased by **80 kb/d MoM**, reflecting seasonal trends and new field startups [52][54]. 10. **Inventory Levels**: Crude stocks built by **13.5 million barrels** in June, reaching record levels, driven by high imports and increased refinery runs [159][160]. Additional Important Insights 1. **Impact of Tariffs**: The US-China tariff situation has led to significant shifts in import patterns, particularly affecting LPG and naphtha [41][43][79]. 2. **Independent Refiners' Challenges**: Independent refiners faced declining utilization rates due to worsening margins and a shortage of crude import quotas [132][137]. 3. **Future Outlook**: The outlook for diesel demand may weaken as export rushes fade, and the end of the harvest season approaches [16][14]. 4. **Government Policies**: New supportive government policies for the aviation industry are expected to sustain jet fuel demand during the summer [33][35]. 5. **Long-term Trends**: Anti-involution policies may threaten the existence of smaller independent refiners, potentially leading to industry consolidation [138][139]. This summary encapsulates the key points discussed in the conference call, providing a comprehensive overview of the current state and future outlook of the Chinese oil industry.

Summary of J.P. Morgan Oil Demand & Inventory Tracker Industry Overview - The report focuses on the global oil industry, specifically analyzing oil demand and inventory levels across various regions, including OECD countries and China. Key Points Oil Demand Trends - Global oil demand is tracking a year-to-date growth of 1.0 million barrels per day (mbd), slightly below the estimate of 1.06 mbd. In July, the average global oil demand reached 105.4 mbd, exceeding the estimate of 105.3 mbd for the month [5][6][7] - After a brief slowdown, global oil demand surged in the last week of July, primarily driven by increased gasoline and jet fuel demand in the U.S. and heightened trade activity in China. Year-over-year, global oil demand is projected to rise by 700 kbd in July, surpassing initial forecasts [5][6][7] - High-frequency indicators show improvement in oil demand, with U.S. freight car traffic at a four-year seasonal high and China's daily flights at a five-month peak, 12.6% above 2019 levels [5][6][7] Inventory Levels - OECD liquid stocks increased by 49 million barrels (mb) year-to-date, while China built 60 mb. In July, visible OECD commercial oil inventories and Singapore stocks reported a 9 mb build, mainly due to an 11 mb increase in crude oil inventories [5][6][7] - Chinese oil stocks saw a decline of 11 mb this week, led by a 12 mb drawdown in crude oil stocks, while oil product stocks marked their eighth consecutive weekly build [5][6][7] Regional Insights - Italy reported a total oil consumption increase of 9 kbd year-over-year in June, with gasoline consumption rising by 16 kbd, while South Korea experienced a decline of 116 kbd [30][5][6] - The report highlights that regional trade deals with the U.S. have alleviated uncertainty and supported industrial fuel demand in East Asia [5][6][7] Other Notable Data - The report includes various figures and tables illustrating oil demand trends, inventory changes, and regional consumption statistics, providing a comprehensive view of the current state of the oil market [5][6][7][30] Conclusion - The J.P. Morgan report indicates a rebound in global oil demand following a slowdown, with significant contributions from the U.S. and China. Inventory levels are also on the rise, particularly in OECD countries, while regional variations in consumption highlight differing market dynamics.

Summary of Key Points from the Conference Call Industry and Company Involvement - The discussion primarily revolves around the **chemical**, **metals**, **mining**, **steel**, and **cement** industries, particularly in the context of **China's anti-involution policy** and its implications for **European cyclical sectors** [1][2][6]. Core Insights and Arguments - **Chemical Industry Impact**: China's significant increase in petrochemical capacity, with **28 million tons of ethylene capacity** added in the last five years against a global demand of **19.5 million tons**, has led to a severe slump in the chemical industry, the worst in **40 years**. An additional **30 million tons of ethylene** capacity is expected to come online in the next five years, potentially extending the slump into the **2030s** [2][6]. - **Capacity Closures**: China's actions have forced closures of approximately **4.5 million tons** (about **20%** in Europe) of capacity elsewhere, but limited closures have occurred within China despite poor sector economics. Significant closures of older, non-economic plants in China could positively impact European petrochemical companies [2][6]. - **Coal and Chemical Production**: The potential for capacity rationalization in the coal industry could increase coal prices in China, raising production costs for chemicals and making European production more competitive. However, there is currently no evidence of mandated production cuts in the chemical value chains by the Chinese government [2][6]. - **Metals and Mining Sector**: Companies with exposure to iron ore, copper, and coal are expected to benefit from potential price increases. Key European companies like **Rio Tinto**, **Glencore**, and **Antofagasta** are highlighted as having significant exposure. The European metals and mining sector has underperformed the MSCI Europe index by approximately **60%** since January 2023, indicating potential for significant outperformance in **2025/26** [2][6]. - **Cement Industry Developments**: The China Cement Association has mandated production cuts for enterprises exceeding recorded capacity to combat low-price competition, which is expected to positively impact the sector. Companies like **Holcim** and **Heidelberg Cement** are noted for their higher exposure due to local joint ventures [2][6]. Additional Important Insights - **Seasonal Slowdown**: China's steel production is showing signs of a controlled slowdown, with expectations of a seasonal decline in the second half of **2025** [2][6]. - **Naphtha Import Quota**: China has approved a naphtha import quota for **2025** that is nearly double that of **2024**, indicating planned expansions in capacity with five new crackers set to start in the second half of **2025** [2][6]. - **Diverse Chemical Products**: The chemical industry comprises thousands of different products, complicating regulatory efforts compared to more singular product sectors like solar polysilicon, steel, or coal [2][6]. This summary encapsulates the critical insights and implications discussed in the conference call, focusing on the potential impacts of China's policies on various sectors and the opportunities for European companies.

Investment Rating - The report does not explicitly state an investment rating for the oil industry in China Core Insights - Chinese apparent oil demand showed year-on-year growth for the first time in three months, increasing by 160 thousand barrels per day (kb/d) to 15.9 million barrels per day (mb/d) in May, driven by strong demand for petrochemicals and travel fuels during the Labour Day holiday [3][6] - Crude imports fell by 720 kb/d month-on-month (MoM) and 90 kb/d year-on-year (YoY) in May, attributed to peak refinery maintenance and high inventory levels [52][61] - Refinery throughput decreased by 200 kb/d MoM, with offline capacity reaching 2.1 mb/d due to maintenance at major state-owned refiners [5][64] - Diesel demand weakened, falling by 60 kb/d MoM and 220 kb/d YoY, influenced by the penetration of new energy vehicles (NEVs) and a struggling real estate sector [12][15] - Jet fuel demand rose by 55 kb/d MoM, supported by increased travel during the Labour Day holiday, although it was down 120 kb/d YoY [26][34] Summary by Sections Supply and Demand - Chinese apparent oil demand increased by 1% YoY in May, with strong naphtha demand as refiners replaced US LPG and ethane imports [3][6] - Crude imports softened further in May, with Iranian crude imports dropping by 40% MoM due to sanctions risk and high inventory levels [4][53] - Refinery throughput fell by 200 kb/d MoM, with all major state-owned refiners offline during peak maintenance [5][64] Product Exports and Imports - Refined product net exports weakened in May, with diesel exports reduced due to strong domestic margins [6][67] - Total product exports fell by 180 kb/d MoM and 220 kb/d YoY, driven by lower gasoline and fuel oil exports [68][93] - LPG imports decreased by 230 kb/d MoM due to a 125% tariff on US LPG, which was later reduced to 10% [76][41] Inventory Data - Crude stocks built rapidly in May, adding approximately 33 million barrels due to low refinery demand [156] - Observable product inventories drew by around 20 million barrels in May, with significant draws in diesel and gasoline stocks [157][161] Refining Data - Gasoline cracks averaged $14.0/bbl in May, down $2.0/bbl from April, while diesel cracks rose to $21.4/bbl [112][113] - Refinery output of diesel and gasoline declined in May, with jet fuel output increasing due to higher demand [141][147] Trade Quotas - China has released two batches of clean product export quotas for 2025, totaling 31.8 million tons, slightly lower YoY [98][100] - The allocation of quotas primarily favors state-owned companies, with Sinopec and PetroChina receiving about 72% of available quotas [98][100]

Key Points Summary Industry Overview - The focus is on the refined products market, particularly gasoline and naphtha, with insights into seasonal price trends and supply-demand dynamics in the context of the summer season [1][2][3][6][12]. Core Insights and Arguments - **Supply-Demand Balance**: The clean products supply-demand balance remains tight, with production incentives favoring middle distillates when crude oil supply constraints are eased. The market's ability to withstand supply disruptions or unexpected demand is currently insufficient [2][3]. - **Seasonal Performance**: Historically, the RBOB crack spread has shown strong seasonal performance, with 7 out of the last 10 Julys experiencing price increases, averaging $2 per barrel. The maximum increase recorded was $8.1 per barrel, while the largest decrease was $3.2 per barrel [3][6]. - **Production Constraints**: Current production levels are at the lower end of the range compared to the past decade, primarily due to crude oil supply restrictions. Despite the easing of production cuts, OPEC+ heavy sour crude exports have not rebounded, impacting distillate production [3][12]. - **Hurricane Season Risks**: The hurricane season poses significant risks to supply, particularly in the Gulf Coast, where approximately 50% of U.S. refining capacity is located. Disruptions could lead to a temporary loss of refining capacity ranging from 500,000 to 2.5 million barrels per day [3][12]. - **Regional Performance Disparities**: There are notable differences in performance between Eastern and Western products, with Eastern products generally underperforming. The average return for European gasoline over the past decade has been particularly strong, with 8 out of 10 years showing positive returns [13][14]. Additional Important Insights - **Crack Spreads and Returns**: The average return for various products in July has been positive, with naphtha and gasoline showing particularly strong performance. The average return for European gasoline was $8.3 per ton, indicating attractive risk-reward dynamics [7][13]. - **Market Sentiment**: The market sentiment is cautious due to geopolitical risks and the potential for supply disruptions, which could further tighten the supply of gasoline and distillates [2][12]. - **Future Outlook**: The outlook for refined products remains optimistic, with expectations of increased middle distillate production if crude oil supply improves. However, the market remains sensitive to external shocks, particularly during the hurricane season [2][3][12]. Conclusion - The refined products market is characterized by tight supply-demand dynamics, strong seasonal performance, and significant risks associated with external factors such as hurricanes and geopolitical tensions. The potential for increased production exists, but market participants should remain vigilant regarding supply disruptions and regional performance disparities.