China is set to continue its crude stockpiling throughout next year, but even the buying spree from the world’s top crude importer would not be sufficient to support oil prices into the $60s per barrel as a major glut looms over the market in the coming months.
Lower oil prices this year and China’s push to bolster its energy security will drive it to add 500,000 barrels per day (bpd) of crude inventories over the next five quarters, Daan Struyven, head of oil market research at Goldman Sachs, told Bloomberg in an interview this week.
Frederic Lasserre, global head of research and analysis at commodity trading giant Gunvor, also believes that China will continue amassing crude oil in strategic and commercial reserves well into 2026.
After a slow start to the year, China began boosting its crude oil imports in March-April and has kept elevated import levels since then. The key driver has been crude stockpiling, not a major rebound in demand, according to analysts.
Unlike the United States, China does not report inventories and analysts are looking at overall supply and refinery processing rates to estimate how much crude is going into strategic or commercial reserves and how much is being processed into fuels.
Higher Chinese purchases have helped support oil prices despite the OPEC+ production hikes and persistent concerns about the growth rate of global oil demand amid inconsistent U.S. trade policies and tariffs.
Despite China’s apparent crude stockpiling, Goldman Sachs expects oil prices to fall to the low $50s per barrel next year, due to an expected oversupply of some 1.8 million bpd towards the end of the year.
After OPEC+ announced it would continue with output hikes in October, Goldman Sachs now expects the global oil market to swing into a surplus of 1.9 million bpd next year.
Based on this expectation of a glut of close to 2 million bpd, Goldman Sachs predicted oil will next year fall to between $53 and $56 per barrel, allowing, however, for higher prices by saying “Risks to our 2025-2026 price forecast are two-sided but skewed modestly to the upside.”
By Michael Kern for Oilprice.com
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