There is growing tanker congestion in the waters around Chinese oil ports as buyers rushed to take advantage of low oil prices in the past couple of months, but onshore storage capacity was too tight for all the arrivals, Bloomberg reports.
Citing data from Kpler, Bloomberg said that this month alone, as many as 200 oil tankers were expected to arrive at Chinese ports.
China's crude oil imports in May jumped to the highest in history ever, at 11.34 million bpd, customs data showed earlier this month. The data confirms that China's economy is on the fast track to recovery from the coronavirus crisis, with the May daily average of oil imports up by 15 percent from April and 150,000 bpd more than the previous import record that Chinese buyers set last November.
This month could see another record intake of oil, with Kpler predicting a daily average of as much as 14 million bpd or more, which would be 20 percent more than the average for May.
Earlier this year, a think-tank affiliated with state oil major CNPC said they expected Chinese oil imports to register a 2-percent annual increase this year because of the low oil price environment.
There are, however, doubts about how long China could continue buying oil at these rates. For one thing, the actual rate of recovery in oil demand may not be accurately reported. For another, the lack of exact data about the country's oil storage capabilities fuels uncertainty. The news about the tanker congestion, therefore, will reinforce these doubts as it suggests that storage capacity is filling up.
Estimates from IHS Markit show that China's crude oil inventories will have jumped by 440 million barrels in the first half this year-the largest six-month increase in inventories anywhere in the world, ever. If imports continue to rise at a record rate, floating storage may become the only option.
By Charles Kennedy for Oilprice.com
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