China October Oil Output Drops

China’s daily crude oil production in October fell to the lowest in more than seven years, statistics bureau data showed on Monday, as producers remain reluctant to drill new wells amid tepid oil prices and as output drops from aging wells.

Oil output last month in China, the world’s second-largest crude consumer, dropped 11.3 percent from the same time a year ago to 16.05 million tonnes, the National Bureau of Statistics reported. The figure is up slightly from September’s 15.98 million tonnes.

On a daily basis, October production was 3.78 million barrels per day (bpd), the lowest since May 2009, and down from 3.89 million bpd in September.

“Producers have not ramped up output even as oil prices rebounded in October. Many of them see the uptick in prices as unsustainable,” a Beijing-based crude trader said.

Prices for international crude benchmark Brent climbed to as high as $53.73 a barrel in October though prices ended the month 1.5 percent lower than at the end of September. Brent was at $44.80 on Monday.

Sinopec’s Chairman Wang Yupu told investors in August that the energy giant would open new discovered reserves if crude prices were between $45 to $50 a barrel to make up for falling output.

Major upstream producer PetroChina reported in October that its crude output for the first nine months of 2016 fell to 696.6 million barrels from 722.9 million a year earlier. Offshore oil specialist CNOOC recorded a 7.7 percent decline in net oil and natural gas production in the third quarter.

For the first ten months of 2016, domestic supply dropped to 166.82 million tonnes, or 3.99 million bpd, compared with 4.30 million bpd in the same period last year, the bureau data showed.

Crude oil refinery throughput in October was up 5.5 percent from a year earlier to 47.05 million tonnes, or 11.08 million bpd, the highest since at least January 2011, as units came back from a heavy maintenance season that lasted from July to September.

For natural gas, China produced 10.8 billion cubic meters (bcm) in October, down 1.4 percent from a year ago. Year-to-date natural gas production reached 111.2 bcm, up 1.9 percent from the same period a year ago.

Reuters

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell