WTI Dips Near $100.75 Amid Chinese Demand Slump

Oil prices traded slightly lower Monday morning, with West Texas Intermediate (WTI) crude hovering near $100.75 per barrel. According to live price data, WTI was down $0.27 (-0.27%) for the day, while the global benchmark Brent Crude was at $109.11, down $0.15. The discount for Bakken crude versus WTI widened to $-3.42.

The modest price retreat follows significant demand destruction from the world's largest crude importer. According to a report from OilPrice.com, Chinese refiners slashed their crude runs to the lowest level since August 2022. Official data published Monday showed crude throughput at Chinese refineries slumped by 5.8% in April from a year earlier, to about 13.3 million barrels per day (bpd). The average refinery utilization rate fell to 63.59%.

China's crude oil imports plummeted by 20%, or 2.4 million barrels per day, in April from a year earlier, according to OilPrice.com. Imports were pegged at 9.25 million bpd, the lowest level since July 2022. Analysts cited demand destruction from higher oil prices and export restrictions, which led to rising inventories of gasoline and diesel instead of drawing on crude stocks.

This "Chinese miracle," as described by Vortexa's Chief Economist David Wech, has been a key factor in market rebalancing amid supply crises. The reduction in buying from the top importer has eased upward pressure on physical crude prices. Many Chinese refiners undertook spring maintenance earlier than planned or are in scheduled maintenance preparing for the summer season.

For Bakken operators, the widening differential to $-3.42 below WTI reflects this softening in immediate demand pressure, particularly for light sweet crudes like Bakken. While global benchmarks remain elevated above $100 due to ongoing geopolitical tensions, the pullback in Asian buying activity provides a counterweight, potentially capping runaway price rallies.

Natural gas prices showed strength Monday, rising $0.08 to $3.04. This contrast with crude's slight decline underscores the differing supply-demand dynamics between commodities.

Morgan Stanley warned earlier this month, according to the OilPrice.com report, that the Chinese and U.S. inventory buffers that have prevented record-high prices could vanish before the potential reopening of the Strait of Hormuz, putting the market in a "race against time." For now, the significant demand reduction from China is providing a temporary cushion against extreme price volatility.