Oil market's reliance on China shows narrowing options

Platts Analytics sees oil prices struggling to go beyond the mid-$40s/bbl mark by the end of calendar year 2020 (CY20) before creeping up to $50/b by end-2021

China may have given oil markets false hope. A rapidly rebounding economy in the Asian powerhouse had initially revived demand, but bloated inventories and stockpiling by domestic refineries have exposed the fragility of prices.

A look at Chinese ports tells the full story. Shandong - home to a host of independent refineries - is completely congested. The volume of crude stored on tankers idled in Chinese waters near the port city for over a week has quintupled from normal levels. 

Chinese refineries, which had taken advantage of relatively cheap prices over the past quarter, are now struggling to find buyers for products,