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China Still Reluctant To Buy U.S. Crude Oil

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The end of the truce in the U.S.-China trade war and the highly unpredictable nature of the next moves in the trade spat have made traders in China even more reluctant to buy U.S. crude oil despite its favorable economics, Chinese traders have told S&P Global Platts.

Chinese refiners and traders have been staying away from US-origin crude cargoes for months amid the trade war, despite the fact that China does not impose tariffs on US Oil. The escalation of trade was at the beginning of this month, when U.S. President Donald Trump said the United States would levy a 1

0 percent tariff on the remaining US $ 300 billion worth of Chinese imports that had been subject to tariffs yet, has made China's oil traders and refiners even more reluctant to contract the U.S. cargoes.

"They buy unless the US ceases tariffs and withdraws the statement saying that China was a currency manipulator," a trader based in Shanghai and dealing with a U.S. crude oil supplier told S&P Global Platts, adding that Chinese customers are not touching spot cargoes and not even thinking of long-term agreements.

Some Chinese companies, however, do have such long-term deals, like Unipec, the trading unit or China's biggest refiner Sinopec. According to S&P Global Platts, Unipec's actual imports from the U.S. Crude oil in China is much lower than the volumes it buys because many of the US-origin cargoes are sold midway en route to China to third parties.

Earlier this month, refinery and trading sources told S&P Global Platts that US Crude oil is unlikely to become a target of possible Chinese retaliatory tariffs. American crude oil is currently not an essential trade item between the United States and China, and China is likely to target goods that could hurt more U.S. exporters and create maximum impact for U.S. Exports of possible retaliatory tariffs, refinery and trade sources in China have told S&P Global Platts.

By Tsvetana Paraskova for Oilprice.com

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