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China Sourcing Update: Energy Costs (Mar 2017)

  1. Crude prices rise during late March to mid-April

In line with the movement of global crude prices, China’s crude prices went up markedly during late March to mid-April. For example, the Daqing crude price rose from a four-month low of US$ 43.8per barrel on 27 March to US$48.7per barrel on 13April(see exhibit 1).

The increase in global oil prices in late March was mainly attributable to the speculation that member countries of the Organization of the Petroleum Exporting Countries (OPEC) plan to extend the crude output cut beyond June. After North Korea conducted a missile test on 4 April and the US fired missiles at a Syrian government airbase on 6 April, crude prices went up further amid growing geopolitical tensions.

Looking ahead, several bearish factors for global crude prices are in play, including a rising oil rig count and a near record-high level of commercial crude oil inventories in the US. That being said, we expect global oil prices to stay high in the near future as investors largely focus on the geopolitical risks over Syria and North Korea.


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Content provided by Fung Business Intelligence
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