{"id":4244,"date":"2019-09-24T16:40:42","date_gmt":"2019-09-24T16:40:42","guid":{"rendered":"http:\/\/euromenaenergy.com\/?p=4244"},"modified":"2019-09-24T16:40:42","modified_gmt":"2019-09-24T16:40:42","slug":"bearish-signal-for-crude-as-china-closes-in-on-filling-oil-storage","status":"publish","type":"post","link":"https:\/\/emimer.com\/?p=4244","title":{"rendered":"Bearish signal for crude as China closes in on filling oil storage"},"content":{"rendered":"
One of the fascinating tidbits to come to light in the wake of the attacks on Saudi Arabia\u2019s crude facilities was China\u2019s disclosure that it has enough oil inventories to last 80 days.<\/div>\n

There isn\u2019t too much short-term significance in this, other than to confirm that China probably won\u2019t be frantic to find replacements for any loss of imports from Saudi Arabia.<\/p>\n

But the information is vitally important from a medium to longer term view of the crude oil markets.<\/p>\n

China\u2019s strategic petroleum reserve (SPR) is largely shrouded in mystery, with no official disclosure of the actual level of inventories in the world\u2019s largest crude importer.<\/p>\n

It likely surprised the market, however, that Beijing is quite close to the 90 days of import cover recommended by the International Energy Agency (IEA) as the level of reserves that importing nations should hold.<\/p>\n

Earlier this year it was estimated by some analysts that China had around 40 to 50 days of import cover.<\/p>\n

The figure of 80 days of crude oil in both commercial and strategic storage was released on Sept. 20 by Li Fulong, the head of development and planning at the National Energy Administration.<\/p>\n

While Li didn\u2019t disclose the exact amount of stored crude, it is likely to be around 788 million barrels, based on taking the average daily imports of 9.85 million barrels per day (bpd) for the first eight months of 2019.<\/p>\n

The last time inventories were officially acknowledged was in December 2017, when it was disclosed that reserves as of end-June 2017 were 277 million barrels.<\/p>\n

This implies that from July 2017 to Sept. 20 this year, China added 511 million barrels of crude, about 630,000 bpd.<\/p>\n

It would also seem that the rate of stock building has been accelerating in 2019, if the difference between the total crude processed at China\u2019s refineries and the amount of crude available from both imports and domestic output is calculated.<\/p>\n

Domestic output in the first eight months of 2019 was 3.83 million bpd and imports were 9.85 million bpd, giving a combined total of 13.68 million bpd.<\/p>\n

Refinery throughput for the same period was 12.74 million bpd, implying that about 940,000 bpd went into either commercial or strategic stocks.<\/p>\n

If China does conclude its stockpiling at 90 days of import cover, the implication is that it has about 98.5 million barrels still to go.<\/p>\n

At a 940,000 bpd rate, this further implies that the filling of China\u2019s storage could be finished in about 105 days.<\/p>\n

There is no guarantee, of course, that China will continue to build inventories at the same clip it has been, or indeed that it will stop at 90 days worth of import cover.<\/p>\n

But the risk for the global crude market is that sometime in the next six months, and possibly earlier, China may dial back the amount of crude it is buying for storage.<\/p>\n","protected":false},"excerpt":{"rendered":"

One of the fascinating tidbits to come to light in the wake of the attacks on Saudi Arabia\u2019s crude facilities was China\u2019s disclosure that it has enough oil inventories to last 80…<\/p>\n","protected":false},"author":1,"featured_media":4248,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[46,48,57,68,76,77,82,86,87,90,96,99,103,107,109,111,113,137,139,146,148,160,174,183,184,201,202,209,222,230,232,233,244,246,249,256,262,263,267,277,279,280,285,288],"class_list":["post-4244","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-oil-gas","tag-aramco","tag-athens","tag-baroudi","tag-carbon","tag-climate","tag-climate-change","tag-co2","tag-cyprus","tag-decarbonising","tag-democracy","tag-doha","tag-eastmed","tag-egypt","tag-embargo","tag-emissions","tag-energy","tag-energy-peace","tag-gas","tag-gazprom","tag-greece","tag-greenenergy","tag-international-maritime-disputes","tag-lebanon","tag-maritime-boundaries-east-mediterranean","tag-maritime-disputes","tag-offshore","tag-oil","tag-opec","tag-pollution","tag-poverty-alleviation","tag-putin","tag-qatar","tag-rosneft","tag-roudi","tag-russia","tag-saudi","tag-solar","tag-solar-power","tag-straddling-hydrocarbons-reserves","tag-total","tag-trump","tag-turkey","tag-unclos","tag-usa"],"_links":{"self":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/4244","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4244"}],"version-history":[{"count":0,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/4244\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/media\/4248"}],"wp:attachment":[{"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4244"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4244"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4244"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}