Oil Market at Inflection Point as China Boosts Imports and Invenories Draw Down

The oil market is at an inflection point, according to Amrita Sen, founder and market intelligence director of Energy Aspects. Crude oil prices are set for further gains due to faster global inventory drawdowns and a return by China to purchasing significantly larger volumes of crude.

Sen pointed out that the trend is pointing higher, with the expected September volume of Chinese crude imports reaching about 10 million barrels per day, roughly 3 million barrels per day above June's decade-low import figure.

The accelerating inventory drawdowns are driving up prices, with 120 million barrels drawn from global inventories over the past two weeks alone. Shipping risks in the Middle East, including tanker attacks in the Strait of Hormuz and the Houthi threat in the Red Sea, are adding pressure to crude supply for Asian refiners.

If cancellations and delays in Hormuz persist, Asian refiners would have little choice but to cut runs. Sen described the oil market as heading toward an upward spiral between crude and products, with prices on track to end a trading week above the $100 a barrel mark for the first time since May.