As China looks to buy more from the U.S. this year, its oil purchases are helping a bit.
Sales increased by about $1.2 billion in the first four months of 2018 compared with a year earlier, thanks to stronger global crude prices. China has offered to boost purchases of U.S. goods by about $25 billion this year ahead of a mid-June tariff deadline. Crude oil, coal and farm products are among the goods that the Chinese are willing to buy more of, according to the people briefed on the talks.
America sent about 330,000 barrels a day of mainly domestic crude and condensate to China in the first four months of the year, about 120,000 more than a year ago, according to latest government data. U.S. benchmark West Texas Intermediate crude averaged $63.77 a barrel during the four months of this year compared with $51.63 the previous year.
“Because of the higher oil prices, the growth in value has been much faster than the growth in volume,” New York-based BMI Research analyst Mara Roberts Duque said in a phone interview. “So, that could help to reduce the deficit.”
The Trump administration has been on a quest to reduce its bulging trade deficit with the Asian giant since last year, making it a core policy goal. U.S. goods exported to China last year totaled $130 billion while Chinese shipments to the U.S. totaled $506 billion. That left a U.S. deficit of more than $375 billion.
There will be room for American producers to ship more oil to China, given that the world’s second largest economy has reduced its intake of Middle East supply due to OPEC’s production cuts. In the first quarter the U.S. share of Chinese crude imports was 2.5 percent, up from 0.1 percent in 2016, Duque said, citing data from China’s General Administration of Customs.