Cheap Russian oil helped China accelerate the pace of stockpiling crude in June to the largest monthly additions to inventories in three years, according to estimates by Reuters columnist Clyde Russell based on official Chinese data.
In June, China is estimated to have added 2.1 million barrels per day (bpd) of crude oil to either its commercial or strategic reserves, up from 1.77 million bpd added to inventories in May, per Russell’s calculations.
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 crude production.
In June, 2.1 million bpd of all available crude supply wasn’t processed by refiners, so it likely went to further fill China’s crude reserves, according to Reuters’ Russell.
Cheap Russian crude played a large part in the high level of stockpiling last month, as China accelerated buying of Russian cargoes to benefit from the discounts at which Russian grades are being offered on the market relative to the crude from other sources, including from the Middle East.
In June, China broke – for yet another month – the record for importing Russian crude oil, per data from the Chinese General Administration of Customs cited by Reuters. Chinese imports from Russia averaged 2.56 million bpd last month, a surge of 44% compared to the same month in 2022, the Chinese customs data showed.
Despite an apparent weakness in its economy, China is importing record volumes of oil and is buying record amounts of Russian crude to add to stockpiles.
During the first half of 2023, Chinese imports of Russian crude oil averaged 2.13 million bpd, which helped Russia oust its OPEC+ partner Saudi Arabia from the top spot as the single biggest supplier to the world’s top crude importer so far this year, per Financial Times estimates based on Chinese customs data. Imports from the world’s top crude oil exporter, Saudi Arabia, averaged 1.88 million bpd between January and June, according to FT’s calculations.
By Tsvetana Paraskova for Oilprice.com
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