China is estimated to have added about 200,000 barrels per day (bpd) of crude oil to its huge inventories in July as imports rebounded from a decade-low in June and refinery runs remained depressed.
The world’s top crude oil importer, unlike other major oil consumers, started drawing down on stockpiles only in May, the third month of the Middle East crisis, as it had amassed an estimated 1.4 billion barrels of crude oil in commercial and strategic stocks at the start of the Iran war.
The trend of drawdowns in May and June appears to have reversed in July, according to calculations by Reuters columnist Clyde Russell based on officially available Chinese data.
Unlike the United States, China does not report inventories. Analysts are looking at overall supply (domestic production plus imports) and refinery processing rates to estimate how much crude is going into reserves and how much is being processed into fuels.
Using this calculation, Reuters’ Russell has estimated that China had 210,000 bpd of crude available to go to storage in July, considering total crude availability of 12.72 million bpd (8.41 million bpd of imports and 4.3 million bpd of domestic production), and refinery throughput of 12.51 million bpd.
The latest estimates show that China’s massive crude oil stockpile has mostly remained intact at about 1.2 billion barrels, five months after the worst disruption to global oil supply began with the closure of the Strait of Hormuz.
China slashed its overall crude oil imports amid the Middle East conflict as its refiners cut run rates and authorities restricted fuel exports to protect domestic supply.
Now China has eased some of the fuel export restrictions, which led to a rebound in crude oil imports in July, following a ten-year low seen in June.
The higher crude oil imports in July likely allowed stockpiling again, in a surprise to the market and possibly indicating continued weakness in domestic demand and refining volumes.
By Tsvetana Paraskova for Oilprice.com
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