Market watchers have analyzed that apparently, China would not be able to meet the US oil and gas purchase target included in the Phase 1 trade deal as the country is struggling to recover from the coronavirus pandemic.
Previously, China said that it would buy USD26 billion worth of US oil and gas in 2020. In the US, Republican lawmakers and trade groups have been lobbying the White House to prioritize China in selling oil, gas, and derivatives as it is the emerging market’s biggest oil and gas consumer.
However, at the moment, China has abundant storage to consume. Other than that, China could also get cheaper liquefied petroleum gas (LPG) and liquefied natural gas (LNG) from Russia via pipelines.
On Tuesday, the US Energy Information Administration (EIA) in July’s Short Term Energy Outlook (STEO) showed that the US oil remains to be pressured by the uncertainty on account of the pandemic, and China’s is no exception.
Moreover, China stocks are on a tear due to the government backing from the People’s Bank of China (PBOC), the atmosphere of China’s A-shares among retail investors, and foreign investors starting to move overweight China.
The situation in the market at the moment is revolving around the government stimulus, more than trade wars and trade deals.
Economist Marc Odo of Swan Global Investments commented, “It is difficult to maintain a ‘bull market case’ that doesn’t involve additional trillions in government spending.”
