China stockpiles on crude oil

Falling prices and expanding storage capacity has encouraged China, the world’s second largest buyer, to secure its emergency stockpiles. A surge in oil imports is thus expected, way above the previous month’s record. China’s higher overseas purchases has provided a bright spot in an otherwise grim outlook for oil demand brought about by uncertainties in the strength of the Chinese economy, as well as the euro zone debt crisis, which pushed oil prices down last month to levels that have been the lowest in more than three years. Prices fell by 3% in April and by 15% in May, prompting governments and refiners to take advantage of the situation by buying crude oil to stockpile. China’s original plan was to complete the 170-million barrel second phase of this year’s strategic oil reserve, and some of its new tanks in northwestern China have now been filled. The country defied expectations in May, when it hauled a record 6 million barrels per day of crude oil, 18.2% higher than a year earlier.
China is also the world’s second largest oil consuming market and total crude supplied to the country, which includes net imports and domestic production, far exceeded the amount that the refineries processed by as much as 1.04 million barrels per day (bpd). It is the highest gap this year, indicating that more oil had been put in commercial or strategic storage. (June 12, 2012)