Chinese oil refiners have cut their daily run rates further, to around 10 million bpd, which is the lowest since 2014, according to industry insiders who spoke to Bloomberg.
Refiners began lowering their run runs in response to the slump in demand for oil products because of the coronavirus outbreak. Earlier this month, OilX told Oilprice that state refiners had cut their processing rates by some 10 percent or 940,000 bpd but independent refiners had cut even deeper, at around 25 percent of what they processed before the outbreak.
"Chinese processors may face the toughest time in the next two weeks," ICIS analyst Li Li told Bloomberg. "Any additional production could be painful," Li Li added, noting that rising inventories and depressed demand.
The coronavirus outbreak pressured international oil prices significantly and the pressure is yet to start going away despite tentative suggestions that the rate of infection may have peaked and quarantines were ending. This could lead to more travel and some improvement in fuel demand, but the improvement will be slow in coming as everyone is extra cautious, with millions of people working from home.
Interestingly enough, however, it seems refiners are buying more oil, according to a Bloomberg report from last week. According to the report, which cited unnamed sources, independent refiners are taking advantage of low oil prices to stock up on crude in anticipation of the demand recovery that is bound take place once fears about the outbreak subside.
This week's report, however, notes that storage space is filling up, suggesting the buying spree could slow down or even stop at some point as run rates remain low because of the subdued fuel demand. In just the last week of January, jet fuel sales in China plummeted by 25 percent and chances are other fuels also suffered drops in sales that will likely persist through this month as well.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More