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China’s crude oil inventories rose by 65.3 percent between March and April, or by 37.84 million barrels, on the back of lower refinery throughput rates and higher imports, S&P Platts has calculated.
This month should see another increase in oil stocks as imports remain robust, the agency said. These hit a record high last month, at 9.64 million barrels daily, up by 14.7 percent on the year and by 4.1 percent on the month.
Refinery processing rates, on the other hand, inched down 0.5 percent to 12.11 million bpd, according to official data. This was more than a million barrels daily less than China’s total crude oil supply including imports and local production, which averaged 13.38 million barrels daily in April.
In March, Chinese refineries processed 12.13 million barrels daily, which was yet another record broken. The decrease in April comes amid refinery maintenance season and throughput rates this month are also expected to be lower than the March ones.
China’s oil demand growth has so far this year exceeded expectations, and Goldman Sachs, for example, says that growth could be even “higher than currently estimated”. According to Goldman, global oil demand growth in the first quarter of 2018 is likely to have seen the strongest yearly growth since the fourth quarter of 2010.
These strong demand forecasts for the world’s number-one crude oil importer have combined with Middle Eastern tensions and the pending U.S. sanctions on Iran to push Brent closer to the US$80 mark, although headwinds from the Lower 48 in the form of a breakneck rate in oil production growth have somewhat curbed the price rally.
But while China has been importing more and more crude, the source pattern of this crude has been changing. Earlier this month, Sinopec said it will cut crude oil shipments from Saudi Arabia by 40 percent in June, after it did the same with May shipments, after Riyadh surprisingly raised the price of its light crude for Asian clients.
At the same time, Beijing has assured Iran it will continue buying crude from it despite U.S. sanctions.
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.