China imported 416 million tons of crude oil during the first nine months of the year, up 12.7 percent on the year, in the latest positive sign for oil demand despite the pandemic. The amount translates into 338.8 million barrels monthly on average, or about 11.29 million barrels daily, using a conversion factor of 7.33 barrels per 1 ton of oil.
In September alone, China's crude oil imports averaged 11.52 million bpd, according to data from energy analytics services provider OilX released earlier this month. Although lower than the average for January to September, last month's average was 24.4 percent or 2.26 million bpd higher than a year earlier.
"After growing for five consecutive months, floating storage in China fell for the first time, indicating that port congestion has started to ease," oil analysts Juan Carlos Rodriguez and Valantis Markogiannakis wrote in a report last week.
The news about a decline in floating storage is particularly encouraging: recently, floating storage globally has been on the increase, deepening concerns about the immediate future of oil demand. At the same time, Chinese refiners are struggling to sell excess product inventory as demand and profit margins remain weak. This may lead to refinery run cuts, and this, in turn, would drive down imports.
On the positive side, some forecasters note that independent refiners still have unused import quotas and may decide to use them up and stock up on refined products in anticipation of demand improvement.
This may be tricky, however. Argus Media reported two weeks ago that further deregulation of the fuels market could lead to lower demand for oil products as alternatives encroach on their territory, according to projections by state energy giant CNPC. A slowdown in economic growth will hardly be of any help, too, the company said.
By Charles Kennedy for Oilprice.com
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