China's crude oil imports in May jumped to the highest in history ever, at 11.34 million bpd, customs data showed, confirming an earlier report by analytics firm OilX, which had calculated China's May imports at 11.11 million bpd.
The data also confirms that China's economy is on the fast track to recovery from the coronavirus crisis, with the May daily average of oil imports up by 15 percent from April and 150,000 bpd more than the previous import record that Chinese buyers set last November.
Among the reasons for the substantial jump in oil imports are bargain-hunting while oil is still cheap, but also developments on the futures market: since April, Chinese hedge funds have been betting big on an oil price recovery on the Shanghai crude futures, which has led to major Chinese state oil firms, including PetroChina and Sinopec, delivering oil into the crude oil futures contract.
But there is also the simple fact of recovering demand for fuel, with data from TomTom showing that traffic has been on a strong rebound in the past couple of weeks as people feel safer in their personal cars than in public transport. Refinery demand has been particularly strong from the so-called teapots, or independent refiners, who have been running their refineries at near-record rates since last month.
The world's top oil importer is set to increase its crude oil imports by 2 percent in 2020 thanks to the low oil prices, according to a research think-tank affiliated with state oil giant China National Petroleum Corporation (CNPC). Apparent crude oil consumption is expected to increase by between 1 percent and 2 percent year on year, CNPC Research says. However, demand for oil products is set for a decline of 5 percent this year from last, the think tank also said.
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
Comments
This is driven by rising domestic consumption particularly since China exited the lockdown and also rising refinery production as well as a growing confidence that China’s economy is recovering much faster than expected despite the destructive impact of the COVID-19 pandemic.
Another underpinning factor is that Chinese hedge funds have been betting big on an oil price recovery on the Shanghai crude futures leading to major Chinese state oil companies, including PetroChina and Sinopec, delivering oil into the crude oil futures contract.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London