In a fresh sign that China is slowing down its crude oil buying spree, Beijing appears to have reduced stockpiling for a second consecutive month in August, suggesting that China's record-breaking oil imports and the support they gave to the fragile oil market may be over.
According to estimates from Reuters columnist Clyde Russell, based on official data for oil imports plus domestic production, less refinery processing rates, China likely stashed 1.1 million barrels per day (bpd) of crude oil in its strategic petroleum reserve or commercial storage in August.
In July, China was estimated to have likely sent 1.92 million bpd into its reserves. This was much lower than the estimated reserve fill in June of 2.77 million bpd, but close to the average for the January-July period reserve stockpiling of 1.95 million bpd, Russell estimated last month.
China imported record volumes of crude oil in May and June, as the oil-hungry nation attempted to benefit from the low oil prices in April. The bargain-hunting for dirt cheap oil resulted in queues at Chinese ports with tankers waiting for weeks to discharge crude that has likely been loaded three to four months ago.
Going forward, there is always the big unknown with China’s commercial and strategic reserves. Since China does not report inventories, analysts are only guessing how much crude oil China is stashing away in its strategic and commercial reserves and how full they are.
Early tanker-tracking estimates for September suggest that China’s crude oil imports may be significantly lower this month. China’s imports of crude oil have been trending much lower in September than in the past four months, while the rest of Asia is also significantly slowing imports this month with demand still under pressure, IHS Markit said last week.
“Activity so far in September suggests that the world’s biggest importer of crude oil has been absorbing much less than a month ago,” said Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade, at IHS Markit.
By Tsvetana Paraskova for Oilprice.com
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What matters is that official Chinese figures show that China’s crude oil imports have this year broken all previous records are so far more than 10% higher than in 2019. Moreover, China’s domestic fuel consumption has also been breaking records as well.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London