China Stored Huge Volumes of Crude Oil in August, Giving it Options: Russell

SEATTLE (Oil Monster):  China's record crude oil processing and robust imports in August have painted a bullish picture of demand in the world's largest importer.

But what is largely ignored, but shouldn't be, is the vast quantities of oil flowing into inventories.

China added about 1.32 million barrels per day (bpd) to either commercial or strategic crude stockpiles in August, according to calculations based on official data.

This reversed a rare draw on inventories in July, when refiners processed about 510,000 bpd more than was available to them from imports and domestic production.

July was the first month in 13 that China turned to stockpiles, and came at a time when imports dropped as crude prices rose during the period when July-arriving cargoes would have been arranged.

This was reversed in August as strong crude imports and steady domestic output outweighed the record refinery processing rates.

China doesn't disclose the volumes of crude flowing into or out of strategic and commercial stockpiles, but an estimate can be made by deducting the amount of crude processed from the total of crude available from imports and domestic output.

China's refiners processed 64.69 million metric tons in July, equivalent to 15.23 million bpd, according to data released on Sept. 15 by the National Bureau of Statistics.

This was up 19.6% from the same month in 2022 and also stronger than July's 14.87 million bpd.

Crude imports were 12.43 million bpd in August, the third-highest daily rate on record and up 20.9% from July and 30.9% from August last year.

Domestic oil output was 4.11 million bpd in August, which when put together with imports means a total of 16.55 million bpd was available to refiners.

Subtracting processing of 15.23 million bpd leaves a surplus of 1.32 million bpd that flowed into storage tanks.

For the first eight months of the year China added about 810,000 bpd to inventories, or a total of about 197 million barrels.

This means that in theory China could lower imports by about 1.61 million bpd over the final four months of 2023 and still have stockpiles at exactly the same level as they were at the end of 2022.

Courtesy: ww.reuters.com