China is drawing on its crude stockpiles while oil trades above $100 per barrel, and Reuters columnist Clyde Russell estimates September draws at about 530,000 bpd. Rising imports in October could reduce the need to tap those reserves, but analysts expect fourth-quarter imports to stay well below last year's average.
China's crude stockpiles are the only market buffer left, after the global oil oversupply at the start of the year was absorbed and stock draws elsewhere depleted crude and fuel inventories. The world's biggest crude importer tapped its inventories again in August and September.
Reuters columnist Clyde Russell estimated the September draws at about 530,000 bpd, based on official data about imports, refinery throughput, and domestic production. Last month, China's crude supply was about 13.46 million bpd, while refineries processed 13.99 million bpd, per Russell's calculations.
Spring import cuts kept prices in check
China slashed its imports when prices spiked, and about 4 million bpd of crude did not have to reach Chinese refiners in April, May, and June. That policy helped keep international oil prices capped.
Then in July, China likely added some 200,000 bpd to its crude reserves after imports rebounded but refinery runs stayed low. It was the only month of the past five in which China was estimated to have added to its reserves.
October imports rebound, fourth-quarter forecasts cut
Chinese crude imports in October are likely to rebound to above 10 million bpd, the highest level since March, according to Kpler data cited by Russell. Oil prices held at about $80 per barrel Brent for most of August, when the October-imported cargoes would have been purchased.
Still, analysts do not expect China to materially boost imports through the end of the year. FGE NexantECA and Energy Aspects now expect China's fourth-quarter imports at 9.2 million bpd-9.3 million bpd, well below last year's average of 11.6 million bpd. Goldman Sachs said at the end of September that at $100 per barrel Brent and above, it is unlikely China would materially raise imports in the near term.
If prices stay above $100 and the Middle East conflict keeps disrupting trade flows, China could tap more of its inventories and cut crude oil imports again.
Source: Oilprice.com
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