China Runs Down Oil Stockpiles as Large Export Quotas Eye Market

China Runs Down Oil Stockpiles as Large Export Quotas Eye Market

(Bloomberg) — China has begun to reduce its crude oil stockpiles, which could indicate that refiners are preparing to boost fuel exports as part of the government’s efforts to revive the economy.

Read more from Bloomberg

Onshore crude oil inventories stood at 909 million barrels as of September 15, the lowest since May 12, according to Emma Li, an analyst with Vortexa Ltd. About 1 million barrels per day have been drawn from stockpiles over the past three weeks, she said. . Satellite data firm Ursa Space Systems puts the figure at 1.05 billion barrels, down 7.5 million barrels from the previous week, and the fourth weekly draw in five, according to analyst Geoffrey Craig.

The decline may be purely seasonal, but could also be an indication that processors are raising current rates in anticipation of pressure to produce and export more fuels, including gasoline and diesel. Refiners and traders have applied for an additional 15 million tonnes of export quotas, which, if approved, would raise allocations so far this year to a level similar to that seen in all of 2021.

National oil companies are considering raising their usage rates by 10% to 15% next month, according to a note from industry consultant FGE, although whether to grant the additional quotas is still subject to jockeying between different government departments, which Energy Aspects Ltd said.

JP Morgan Chase & Co., meanwhile, said it thinks China is unlikely to approve that level of exports, saying the amounts requested are excessive.

Oil refining activity has been near pandemic-era lows in recent months. China has been slow to use up stockpiled crude due to a weaker economy and strict government virus controls, which have hampered the use of transportation fuels and slowed petrochemical demand.

Events Today

(Always Beijing unless otherwise stated)

  • IEA Webinar on the Transformation of China’s Electric Power Sector, 15:00

  • EU-China Future Gas Energy Cooperation Platform panel discussion, focusing on security of supply and carbon capture, 15:00

  • China Mining Conference and Exhibition, online, day 1

Today’s chart

The slump in China’s heavy metal property market appears to have deepened in July and August, Bloomberg Economics says. New mortgage rate cuts and local government efforts to generate housing demand are failing, and the sector is set for a painful, long-term adjustment. Decisive policy measures may be required to prevent a crash scenario.

Demand for Housing in Darkening

On the wire

  • Kerry Sees Prospect for Thawing in Frozen US-China Climate Talks

  • China’s Unipec Buys W. Africa, Brazil’s Oil as Prompt Demand Gains

  • Taiwan to buy $600m in Iowa Corn Goods as US-China Breweries Tensions

  • China’s Metals Producers Expand Commitments, Develop Acquired Mines

  • Nickel Industries Signs Cooperation Agreement With QMB New Energy

  • Senators Seek Secondary Sanctions on Russian Oil Purchases

  • Cheaper Argentine soybeans arrive in China as US Harvest begins

The Week Ahead

Thursday, September 22

  • EU-China Energy Cooperation Platform panel discussion in the Future of Gas, focusing on competitive markets and renewable gas, 15:00

  • China Mining Conference and Exhibition, online, day 2

  • USDA weekly top crop export sales, 08:30 EST

Friday, September 23

  • Bloomberg China economic survey for September, 10:00

  • China iron ore port weekly stockpiles

  • Shanghai Exchange weekly commodity inventory, ~15:30

  • China Mining Conference and Exhibition, online, day 3

Read more from Bloomberg Businessweek

©2022 Bloomberg LP

Leave a Reply

Your email address will not be published.