Once China Reopens, Oil Prices Are Going Way Higher

Last week, we wrote an article titled, "The facts have changed." Since then, the facts have changed yet again, but in the same direction and even more bullish than we originally expected.

One of the key assumptions for us was that China was going to end the zero COVID policy after October. There were already signs that the strict COVID policy was going to end. We started hearing rumblings of Chinese refineries ramping up throughput in the last few weeks in anticipation of 1) higher export quotas and 2) higher domestic demand. But we didn't have any concrete evidence to guide our thinking.

This fact has firmly changed. Over the weekend, China issued the first batch of crude oil import quotas for 2023. This is mainly for independent (teapot) refineries. The volume issued is for ~146 million bbls. 

Why is this bullish?