Pre Open US - US Oil 22 Aug 2023

China's recent surge in crude oil imports from Saudi Arabia is driven by heightened purchases from key Asian buyers. Despite August's increased arrivals, this rise isn't expected to have an immediate significant impact. Major importers like China, Japan, India, and Taiwan are projected to collectively raise Saudi crude imports by 1.2 million barrels per day, hitting historic highs. China's shift towards Saudi crude is due to constrained Russian Urals crude supply and pricing. Although August saw a rise in Saudi oil imports, experts predict Chinese purchases to stay modest in Q3 (July-September). Saudi Arabia still trails behind Russia, its OPEC+ partner, in delivering crude oil to China. July saw Russia surpass Saudi Arabia as China's top crude oil supplier, despite higher prices and narrower discounts. Russian imports in July were up 13% from 2022, while Saudi imports declined by 14% YoY and 31% from June 2023. Analysts anticipate Chinese demand for Saudi oil to recover in the long term.

The WTI price action on a daily basis appears to be forming a head and shoulders reversal pattern. The current support level is at 79, and a breakout below this level could potentially lead the price toward the next target of 77.