Business News

CCTV Script 24/05/16

– This is the script of CNBC's news report for China's CCTV on May 24, Tuesday.

Welcome to CNBC Business Daily, I'm Qian Chen.

Prices for oil futures have jumped by almost a quarter since April, lifted by severe supply disruptions caused by triggers such as Canadian wildfires, acts of sabotage in Nigeria, and civil war in Libya.

Fereidun Fesharaki, Chariman of FGE, said these are all short-term reasons.

[FEREIDUN FESHARAKI, FGE Chairman] "The market is stronger than it should be, but mostly because of a lot of existed players are offline right now because of variety of short-term reasons."

Yet flying into Singapore, the oil trading hub for the world's biggest consumer region, Asia, reveals another picture.

As Asia's main physical oil trading hub, the number of parked tankers sitting off Singapore's coast or in nearby Malaysian waters is seen by many as a gauge of the industry's health.

Judging by this, oil markets are still sickly: a fleet of 40 supertankers is currently anchored in the region's coastal waters for use as floating storage facilities.

The tankers are filled with 47.7 million barrels of oil, mostly crude, up 10 percent from the previous week, according to newly collected freight data in Thomson Reuters Eikon.

That's enough oil to satisfy five working days of Chinese demand, suggesting recent supply disruptions - which have mostly occurred in the Americas, Africa and Europe - have done little to tighten supply in Asia as Middle East producers keep output near record volumes in a bid to win market share.

However, there's an other challenge that the oil market is facing right now -- crude market vs. product market.

[FEREIDUN FESHARAKI, FGE Chairman] "We are seeing a short crude market and a long product market. A lot of refiners are running refineries too hard. They bring the crude in, and they export it. For example, China is gonna be importing 700 thousand barrels per day more crude this year, although its actual demand growth is about half of that. So we see a change in the picture. Crude market is quite strong, but we may have problem later on, the product market being surplus."

CNBC's Qian Chen, reporting from Singapore.

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