China’s refiners likely drew 200,000 barrels per day (bpd) out of storage in October as they processed record daily volumes of crude while oil imports slowed.
The estimate is a very rare occurrence this year for China, which gobbled up cheap cargoes in the spring, likely sending high amounts of that into storage, Reuters columnist Clyde Russell notes.
China’s rate of stockpiling crude oil this year has been much higher than in 2019 due to the ultra-low prices in the spring, expansion of storage sites, and the policy to ensure energy security.
According to estimates from Russell, based on official data for oil imports plus domestic production, less refinery processing rates, refiners processed in October 200,000 bpd more crude oil than the available crude supply from imports and domestic production in the month.
China does not report either strategic or commercial inventories, so it’s always a guestimate how much oil it is and has been stashing in storage tanks.
The refinery runs in October—at a record of 14.09 million bpd, according to Reuters calculations of official Chinese data, beat the previous record of 14.08 million bpd set in June this year.
At the same time, China’s imports plus domestic crude oil production resulted in available supply for the month at 13.89 million bpd, Reuters’ Russell estimates. The gap of 200,000 bpd may have been drawn from storage—a stark reversal from the previous months this year when China was estimated to send more than 1 million bpd into storage each month.
Chinese crude oil imports in October were 10 million bpd, down by 12.2 percent from September, due to independent refiners using up 2020 import quotas and storage nearing capacity. Yet, going forward, imports are expected to rebound from the October low with the 2021 quotas for independent refiners and the eased congestion at Chinese ports, which were overwhelmed by tankers carrying crude that refiners had bought at bargain prices in the spring.
By Tsvetana Paraskova for Oilprice.com
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