Oil prices collapsed again weekend as china aims to reduce refineries capacities

Oil prices collapsed again weekend as China aims to reduce the capacity of its teapot refineries and Hurricane Irma zeros in on Florida. This dramatic drop in oil prices ended several days of strong gains and created the largest spread between WTI and Brent in two years.

The spread between Brent and WTI jumped to its largest disparity in two years at over $6 per barrel. But that will likely ease as Gulf Coast refineries ramp up and U.S. crude is exported. There is a line of tankers sitting in the Gulf waiting to receive crude, so U.S. oil exports should rebound quickly.

China’s slowing demand for oil products, especially diesel, is expected to lead to a flood of refined product exports to Asia this year even as crude imports grow, forecasts have shown. The increased refining runs, plus purchases to build crude reserves, helped lift Chinese crude oil imports 8.8 per cent to a record 336m tonnes in 2015, according to official customs data.

But the rising imports mask a weakening domestic market, as a slowing economy reduces demand for cheap coal. That in turn cuts into the consumption of diesel by long-haul trucks that clogged highways when the economy was booming.

China National Petroleum Corp, the Chinese state-owned oil group, forecast on Tuesday that net exports of oil products would rise almost a third in the coming year, on the back of a 5.3 per cent jump in oil refinery throughput. CNPC expects China’s 2016 oil demand to rise 4.3 per cent to 11.32m barrels per day — well below total refinery capacity, which CNPC forecast would reach 14.4m barrels a day this year.

Meanwhile France plans to pass legislation this year to phase out all oil and gas exploration and production on its mainland and overseas territories by 2040, becoming the first country to do so, according to a draft bill presented on Wednesday.

President Emmanuel Macron wants to make France carbon neutral by 2050 and plans to curb greenhouse gas emissions by leaving fossil fuels, blamed for contributing to global warming, in the ground.

Under the draft presented to cabinet, France will no longer issue exploration permits. The extension of current concessions will be gradually limited until they are phased out by 2040 – when France plans to end the sale of gasoline and diesel vehicles.

The decision is, however, largely symbolic because France produces only about 6 million barrels of hydrocarbons a year, representing about 1 percent of its consumption.

France will continue to import and refine oil.

Ecology Minister Nicolas Hulot said after the cabinet meeting that the decision shows France’s commitment to climate change goals and will enable it to convince others to follow.

“The law will halt the exploitation of hydrocarbons in our territory; existing concessions cannot be renewed beyond 2040,” the draft bill states.

No shale gas permit has been issued in France and it will be impossible to do so after the law is passed.

The law could affect companies such as France’s Total (TOTF.PA), which although it has discontinued oil exploration in mainland France, has permits to explore in overseas territories such as offshore Guyane Maritime in French Guiana.