Launceston, Australia — One of the assumptions most observers of the crude oil market make is that China will continue to be the engine of global demand growth, thereby providing underlying support to prices. It’s not an unreasonable assumption, given that the world’s largest importer brought in 8.4-million barrels per day in 2017, 10.1% more than in the prior year, according to customs figures. The extra 800,000 barrels per day China imported in 2017 was about half of total global demand growth. However, there are increasing signs that China’s crude oil imports are moving toward becoming a zero-sum game, insofar as much of the rise in imports is being exported as refined fuels. A zero-sum game is when the gains of one group are cancelled out by the losses of another. While China isn’t exporting every extra barrel of crude it imports as refined products, it is increasing its overseas fuel sales, thus potentially displacing crude demand at refiners it is successfully challenging for ...

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