Crude oil inventories in China rose to the highest in almost three years in March, suggesting demand growth was lagging behind refinery processing rates, which hit a one-year high last month as Chinese oil processors took advantage of cheap Iranian and Russian crude.
Reuters’ Clyde Russell reported that 1.74 million barrels daily went into storage last month in China, citing official data from Beijing and noting that this is the highest rate of storage inflows since June 2023.
Run rates at Chinese refineries during the same month averaged 14.85 million barrels daily, Russell also reported, which represented a modest 0.4% increase on an annual basis.
Imports, meanwhile, rose by a rather more solid 5% in March to 12.11 million barrels daily in yet another sign that China’s demand for oil may be more resilient than most forecasters, including in China’s energy industry, assume. The fact that China’s domestic production is running at a record high seems to reinforce the dubiousness of that assumption. Chinese oil output hit 4.6 million barrels daily in March.
In further evidence of the shakiness of that assumption, Reuters’ Russell also noted in his report that over the first two months of this year, Chinese refiners actually had to draw on inventories to cover demand for fuels and other oil products because domestic production and imports were not enough to cover it.
There is also the matter of Iranian imports and Chinese oil buyers’ taste for a bargain, which is what Iranian crude is, with almost 100% of the country’s export-bound oil being sold in China. In March, Iranian oil imports into China hit 1.71 million barrels daily, Kpler data cited by Russell showed. That was up from 1.43 million barrels daily in February. It was also the highest Iranian oil import rate since last November.
By Charles Kennedy for Oilprice.com
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