Oil was mixed Friday morning in Asia, with investors weighing strong import data from China against a COVID-19 outbreak in the world’s biggest crude importer that has seen several Chinese cities impose lockdown measures.
Thursday’s customs data showed that crude imports into China were up 7.3% in 2020. Increased runs by refineries and stockpiling prompted by low prices saw record arrivals in two out of the four quarters of the year.
However, China is grappling with a fresh COVID-19 outbreak, reporting the highest number of daily COVID-19 cases in more than ten months on Friday. More than 28 million people are currently under lockdown and the country also reported its first COVID-19 death in eight months.
Across the wider Asian region, “refining margins remain abysmal and regional floating storage is higher than month-ago levels,” RBC added.
Producers are facing unprecedented challenges, balancing supply and demand with COVID-19 vaccine rollouts and lockdowns. However, strong equities and a weaker dollar, along with strong Chinese demand, have given financial contracts a boost.
“Oil market euphoria is unequivocally strong, but market indicators from Asia are mixed … China, the global engine of oil demand growth, is wrestling with fresh COVID-19 outbreaks,” RBC Capital Markets told Reuters.
However, U.S. President-elect Joe Biden’s unveiling of the $1.9 trillion “American Rescue Plan” helped raise prospects of increased oil demand in the U.S., the world’s biggest crude consumer. The plan includes a wave of new spending, more direct payments to households, an expansion of jobless benefits and an enlargement of vaccinations and virus-testing programs.