China Buys Crude Oil from the U.S.

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030629-N-4790M-003 Central Command Area of Responsibility (Jun. 29, 2003) -- Commercial oil tanker AbQaiq readies itself to receive oil at Mina-Al-Bkar Oil terminal (MABOT), an off shore Iraqi oil installation. AbQaiq is the first commercial vessel to receive a post-war shipment of crude oil for export at Mabot. AbQaiq is scheduled to take on an estimated 2 million barrels of crude oil. U.S. Navy and coalition forces are helping to provide security, enforcing an exclusionary perimeter around the terminal. U.S. Navy photo by Photographer's Mate 2nd Class Andrew M. Meyers. (RELEASED)

The Chinese refiner, Sinopec, bought 600,000 barrels of oil from a U.S. firm, and the shipment left a port in the Gulf Coast.  The number isn’t large, but Sinopec’s statement regarding the purchase is.  Sinopec said that it was buying from the U.S. in order to diversify its source of oil.  So in spite of the fact that Saudia Arabia is willing to pump and sell as much oil as anyone wants to buy, Sinopec wants to buy from other sources.  That indicates that there will be an available, if small, market for U.S. oil.  Hopefully that will be enough to keep some U.S. fracking companies above water.  In the meantime, we can only hope that decreased prices for oil will lead to increased utilization and decreased investment in high-cost drilling programs, which will eventually decrease the oversupply and drive prices back up to a slightly more healthy level.