China’s Crude Inventories, Russia’s Latest Oil Measures, and Hydrogen Demand

MAIN TAKEAWAYS

• The increase in Chinese oil demand may not cause a significant increase in oil prices. China will use its SPR to prevent the price of Brent crude from increasing to $100/b as it did in 2021.

• Up to 81% of the changes in China’s total oil inventories are linked to changes in oil prices.

• China’s total oil inventories are higher than US inventories by at least 200 mb.

• Setting Russian oil prices at a discount to Brent for tax purposes while cutting production by 500,000 b/d has no impact on the oil market.

• Long-term hydrogen demand is expected to grow significantly. Power and natural gas traders can utilize their expertise to engage in the emerging hydrogen market and its various derivatives.