Oil prices are shaking off bearish American Petroleum Institute (API) data and instead focusing on record-breaking Chinese refinery runs. Again we have the promise of a COVID relief stimulus package so Congress can go home and enjoy the holiday.

Photo by Charlie Hang on Unsplash

Instead of correcting last week’s crude increase as many expected, the API instead reported that the oil supply rose by 1.973 million barrels. That was even though the Cushing oil supply fell by 165,000 barrels. The API also said that the distillate supply rose by a much more extensive than expected 4.762 million barrels. Gasoline increased by 828,000 barrels as well. Still, even though the data was bearish, the market was only slightly impacted. It was like the polar opposite of last summer when we received bullish data, and the prices still fell. Now we hold or rally on so-called bearish data.

Part of the reason oil held its rally is that Asian oil demand is surging, and supplies are tightening. Bloomberg News pointed out that China's oil refiners processed a record 14.26m barrel per day b/d in November (up to 55k b/d y-on-y), keeping refinery runs above the 14mb/d marks for the 6th consecutive month. India's oil demand is also on the rise, and refiners are ramping up. S&P Global Platts reports India's appetite for oil should emerge from the red and post positive growth in 2021, a year that will likely witness critical consolidation and mergers as well as refiners' strategic push to devise ways to reduce their carbon footprint.

in November, New Delhi announced a $35 billion package to stimulate the economy by boosting jobs, consumer demand, manufacturing, agriculture, and exports. India's demand for oil products rose 0.4% month on month in November to 17.83 million mt, or 4.7 million b/d, the latest provisional data from the Petroleum Planning and Analysis Cell showed. Diesel demand rose 5.2% on the month, gasoline inched 0.4% higher, naphtha demand increased 3.3%, and jet fuel rose 4.8% in November.