China Daily Oil Summary: Teapot Margins Under Pressure

Profit margins at China’s independent refiners turned negative in late October for the first time since early January driven by higher crude prices and weakening demand for diesel and gasoline according to JLC.

• China independent refiners to lower runs by 5%-10% in November m/m, to 4.5m to 4.75mbpd, before a further 3% reduction in December.
• Planned refined oil product exports from China are scheduled to be 2.73m mt in November, down 26% on October, according to OilChem citing shipping schedules. The main factor driving the fall is a reduction in planned exports of gasoline and gasoil due to a scarcity of export quotas, OilChem said.
• Russian ESPO crude prices have slipped to a discount to Brent in Chinese ports as its demand eases and freight costs have jumped. This is down from a $1/bbl premium to ICE Brent for cargoes loading in November.
• YUAN: The currency weakened to 7.2756 to the dollar from 7.2851 on Tuesday.
• POLICY: The People’s Bank of China (PBOC) will ensure the stability of the yuan exchange rate and continue to reduce the actual lending rate whilst pursuing transformation of economic growth, Pan Gongsheng, the governor of the People’s Bank of China told the Financial Street Forum in Beijing.
• China will further strengthen its connection with overseas markets, optimize the Qualified Foreign Institutional Investor (QFII) programme, and attract more overseas institutions to operate in its capital market, said Wang Jianjun, vice chairman of China Securities Regulatory Commission in a speech at the Global Financial Leaders' Investment Summit.