China has bought a record $5,835 billion worth of U and Canadian crude oil futures to boost its global oil supply and offset a drop in the price of crude, which has fallen since the end of last year.
The U.K.-based benchmark Cushing, Texas-based U.N. benchmark Brent and the European Union-based Euronext all fell after China announced it would buy $5bn of Canadian crude from a subsidiary of state-owned oil giant Sinopec in a deal that was not immediately disclosed.
The deal is China’s biggest ever in the United States.
It is likely to boost the nation’s oil demand as it ramps up production at its massive petrochemical complex.
Analysts said the deal was a blow to the price and the futures contracts were already trading at a premium to the current price, while the market value of oil in the U.E. rose from $4.20 to $5 a barrel.
China has been buying U.B.C. crude since June, when the world’s second-biggest producer agreed to buy up to 60 per cent of its Canadian crude output.
It has so far bought 5,500 barrels per day, about twice as much as OPEC.
The move is expected to boost oil demand by as much 30 per cent.