(The opinions expressed here are those of the author, a
columnist for Reuters)
* Graphic of China available crude vs. Refinery runs: tmsnrt.rs/2mqDu2E
By Clyde Russell
LAUNCESTON, Australia, March 15 China's
stockpiling of crude oil appears to have increased in the first
two months of the year, despite prevailing higher prices caused
by OPEC and its allies curbing output.
The country rarely releases detailed inventory levels for
strategic and commercial storage, but it's possible to work out
an estimate from net crude imports, domestic output and refinery
In the first two months of 2017 the total amount of crude
available from net imports and domestic output was 96.72 million
tonnes, equivalent to about 11.97 million barrels per day (bpd),
according to official statistics.
The refinery throughput for January and February was 90.76
million tonnes, or about 11.23 million bpd, according to data
released on Tuesday by the National Bureau of Statistics.
On a daily basis, the runs for the first two months of the
year were the second highest on record, just behind December's
11.26 million bpd. The bureau provided only numbers for the
first two months in order to smooth the impact of the Lunar new
Subtracting the amount of crude processed by refiners in the
first two months of 2017 from the total amount available leaves
about 740,000 bpd, most of which is likely to have flowed into
commercial or strategic storage.
This is slightly higher than the 732,800 bpd gap between
available crude and the amount refiners processed over the whole
While this isn't a major increase, it does come against a
backdrop of higher prices over the period when crude that
arrived in January and February would have been booked.
Brent crude jumped from a close of $46.38 a barrel
on Nov. 29, the day before OPEC and its allies agreed to curb
output by 1.8 million bpd for six months starting January, to a
peak of $57.10 by Jan. 6.
This implies that the higher crude price was no deterrent to
China's efforts to fill its strategic petroleum reserve (SPR) to
reach 90 days of import cover, with the process estimated to be
less than half complete so far.
Brent has since slipped back as investors took the view that
OPEC's actions aren't doing enough to drain excess inventories
from the global crude market, with the price slumping to close
at $50.92 a barrel on Tuesday.
If anything, the lower price may encourage increased buying
for stockpiling by China, but that may only be seen from April
It is possible that March crude imports may dip from the
breakneck pace of the first two months of the year, with Thomson
Reuters Supply Chain and Commodity Forecasts estimating China
will bring in 31-32 million tonnes, down from the 34 million
received in January, but more in line with February's 31.78
PRODUCT EXPORTS STEADY
Another factor that appears to be driving China's crude
imports is the level of exports of refined products.
For the first two months of the year this was 7.3 million
tonnes, equivalent to about 990,000 bpd, which is slightly less
than the 1.06 million bpd recorded for 2016 as a whole.
There is no doubt that part of last year's 13.6 percent jump
in crude imports was because of the 33.7 percent surge in
However, so far in 2017 it looks to be fairly steady as far
as exports of refined fuels goes, and much will depend on
whether the authorities in Beijing grant more quotas for
Already Beijing has signalled that it won't allow smaller,
independent refiners to export this year, ending a year-old
policy to allow some of them to sell diesel, gasoline and
naphtha to overseas markets.
While the independent refiners accounted for only a small
slice of China's overall product exports, any indication that
Beijing will act to curb fuel exports may result in slower
growth in crude oil imports.
(Editing by Richard Pullin)