Crude moves higher amid China's US import boost ahead of key OPEC meet

New York — 0333 GMT: Crude oil futures were higher in mid-morning trade in Asia on Aug.17 as sentiment remained buoyed ahead of a key OPEC+ production review meeting on Aug.19 despite a postponement in the US-China trade deal review over the weekend amid expectations of a continued uptick in China's US crude import.

At 11:33 am Singapore time (0333 GMT), the ICE Brent October crude futures were up 31 cents/b (0.69%) from the previous settle at $45.11/b, while NYMEX September light sweet crude contract was up 35 cents/b (0.83%) at $42.36/b.

"Oil remains buoyed by optimism that a sustained recovery in energy demand is underway boosted by US government data showing crude oil, gasoline, and distillate inventories all declined the week-ending Aug.7," AxiCorp chief global markets strategist Stephen Innes said in a note Aug. 17.

A delay in the meeting between US and China, which was to occur over the weekend, to review its trade agreement did not dampen investors' sentiment on expectations that China plans to continue shipping large volumes of US crude in the near-term.

"China increasing US oil imports is the most apparent trade deal reaffirmation," Innes said. "From a trade talk risk perspective, wiping down the last remnants of escalation risk is favorable for oil prices."

China's independent refineries ramped up US crude imports in July, picking up 1.37 million mt in the month, according to market information collected by S&P Global Platts earlier this month.

In addition, at least 965,000 mt of North American crude cargoes are waiting to be discharged for the private companies in August.

China's total crude imports from US, meanwhile, had jumped to an eight-month high of 143,452 b/d, or 587,118 mt, in June with expectations that US imports could rise further in July and August, analysts and traders said last month.

Oil prices moved higher ahead of a meeting this week to review OPEC+ cut agreement. The Joint Ministerial Monitoring Committee (JMCC), which is co-chaired by Saudi Arabia and Russia, is set to meet on Aug. 19 to assess compliance with quotas and recommend any adjustments to the cuts if needed.

"The OPEC+ meeting this week is expected to yield little surprises, with production curbs expected to continue as outlined in April," OCBC Bank researchers wrote in a note on Aug. 17.

OPEC and 10 allies, including Russia, had implemented the largest coordinated production cut in history of 9.7 million b/d, equivalent to about 10% of pre-pandemic demand.

The cuts have been scaled back to 7.7 million b/d from August through the end of the year and will relax even further to 5.8 million b/d from January 2021 through April 2022.

Members that exceeded their production quotas will have to make compensatory cuts in the coming months, moderating the full impact of relaxing the OPEC+ deal, ministers have said.

"Russia's Energy Minister Alexander Novak said the global oil market is stabilizing gradually, so [there is] no need to ease OPEC+ output cuts ahead of schedule," Innes said on Aug. 17.

Meanwhile, OPEC+ member Oman has reported a 13.5% month-on-month decline in its crude oil exports in July to around 778,012 b/d.

China accounted for 88.81% of the total exports in July, while India took the remaining 11.19%, the oil and gas ministry said Aug.16.

Oman's crude oil production averaged 671,275 b/d in July, down 1.85% on the month, and lower than the 682,000 b/d quota under the OPEC+ agreement for May-July. Its quota for will rise to 722,000 b/d from August through the end of the year.