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As Chinese refiners returned from maintenance and built stockpiles, China’s crude oil imports jumped in May to the third-highest level on record, according to official data.
China’s crude oil imports averaged 12.11 million barrels per day (bpd) in May, per data from the General Administration of Customs cited by Reuters. The imports in May surged by 17.4% compared to April when China imported just 10.32 million bpd of crude oil. The May crude arrivals were also 12.2% higher than in May of 2022 when imports averaged 10.79 million bpd.
The building of crude inventories has supported crude oil imports and demand despite the mixed macroeconomic data coming out of China in recent weeks.
“Demand slowdown from China has been a major concern for the crude oil market recently, and a recovery in oil imports is likely to provide some comfort to the oil market,” ING strategists Warren Patterson and Ewa Manthey said on Wednesday.
Yet, the most recent economic data out of China continues to be a concern for the market and could result in lower demand for crude and other commodities and slower-than-expected global oil demand growth this year.
The weaker-than-expected Chinese economic data could start showing up in lower commodity exports in a few months as actual imports lag purchases, Reuters’ columnist Clyde Russell argues.
The question for the market and analysts is whether estimates about China’s oil demand growth this year have been too optimistic.
Despite underwhelming economic data from China that have depressed oil market sentiment in recent weeks, no one has made any material downward revisions to their forecasts for China’s oil demand growth.
China’s economy and oil demand will be the single most important driver of oil prices this year, even if OPEC+ manages to push prices upwards, Fatih Birol, the Executive Director of the International Energy Agency (IEA), told Bloomberg on Wednesday.
“There are many uncertainties, as usual, when it comes to the oil market, and if I have to pick the most important one, it’s China,” Birol told Bloomberg TV.
By Michael Kern for Oilprice.com
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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com,