China Likely Tapped Its Crude Inventories In July

Chinese refiners likely tapped their crude stockpiles in July as crude processing ramped up while imports slumped from the previous month, estimates by Reuters columnist Clyde Russell based on official Chinese data showed on Wednesday.

Before July, China was estimated to have been stockpiling crude, and accelerating the pace of building inventories. Cheap Russian oil helped China accelerate the pace of stockpiling crude in June to the largest monthly additions to inventories in three years, Reuters’ Russell estimated last month.

In July, however, China likely tapped crude storage because the refinery throughput exceeded available crude from imports and domestic production.

China does not report commercial or strategic inventories, so analysts are trying to estimate the volume of stockpiling by deducting the amount of processed crude from all available crude coming from imports and domestic production.

Earlier this week, statistics data showed that Chinese refiners processed 17.4% more crude oil last month in response to stronger demand for fuels both at home and abroad. The processing rate translated into 14.87 million barrels per day (bpd) of crude, up from 12.5 million barrels daily a year earlier.

The refinery throughput in July, at 14.87 million bpd, exceeded total available crude oil volumes, Reuters’ Russell notes.

Crude oil available to refiners averaged 14.36 million bpd, including imports of 10.29 million bpd and domestic crude oil production of 4.07 million bpd. This leaves a gap of around 510,000 bpd, which refiners likely drew from inventories, China’s first tapping into stockpiles since November 2021, Russell adds. 

While refining processing rates surged in July, Chinese crude oil imports slumped last month compared to June, although they were higher than in July 2022. China’s crude oil imports averaged 10.29 million bpd in July, compared to a record 12.67 million bpd in June. The July imports were 17% higher compared to the same month last year, when China was still under strict Covid-related lockdowns.

By Charles Kennedy for Oilprice.com

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