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China’s Dec increment in crude stocks hits record high of 65.35 mil barrels

China’s implied crude oil stocks as of end December surged 65.35 million barrels from end-November, registering another record high monthly increment.

The last record high for the implied crude stock build was 56.29 million barrels in November 2018, S&P Global Platts calculations based on official data showed.

The strong increment lifted China’s December-end crude stocks by 328.49 million barrels from the end of December 2017.

The country does not release official data on stocks. Platts calculates the country’s net build or draw in implied crude stocks by subtracting official refinery throughput data from the country’s crude supply data. The latter takes into account net crude imports and domestic production.

The implied crude stocks that Platts calculates does not take into account China’s crude oil consumption for any usage other than refining, due to a lack of official data.

The high stockpile was driven by stronger month-on-month increase in crude oil supplies than crude throughput from November.

China’s overall crude supply in December rose 3.3% from the latest record in November to 440.43 million barrels, and climbed 21.3% year on year, led by strong net crude imports. Meanwhile, domestic crude output registered a slight increase, both from the previous month and a year ago.

Buoyed by strong buying from the independent sector, China’s net crude imports gained 2.7% from November and soared 30.5% year on year to the monthly record high of 320.73 million barrels in December, General Administration of Customs data showed.

Crude throughput at refineries inched up 1.4% month on month to 375.08 million barrels in December amid limited demand for oil products, National Bureau of Statistics data showed. However, the increase lagged the sharp growth in crude supply.

A survey by Ursa, a geospatial intelligence agency, showed China’s crude stocks in polled strategic petroleum reserve and commercial storage rose by 35.14 million barrels from November to average 703.05 million barrels in December, the highest monthly stock level in 2018.


“We expect to continue to see crude oil stock build in Q1 as crude oil imports remain heavy,” a Hong Kong-based analyst said.

However, a Beijing-based crude trader said that “the continuous stock build will cap crude buying interest for early 2019 delivery. So China’s crude oil imports is unlikely to hit a high until April.”

S&P Global Platts’ trade tracker cFlow showed that seaborne crude oil arrivals in January edged down by 0.47% to 9.29 million b/d from December, and February deliveries were likely flat from January.

China imports crude oil via waterways and by land through pipelines and railways.

Crude stock build in January is likely to decline from the level recorded in December as refineries lift their run rates.

China’s state-owned refiners Sinopec, PetroChina, Sinochem and China National Offshore Oil Corp. lifted their operation rate to an average of 85% in January, from 82% in December, due to easing oil products stocks amid rising exports, Platts’ survey showed.

The refiners account for about 75% of China’s total refining capacity, with the rest from independent refiners which kept their average run rate broadly unchanged at 64%-65%.
Source: Platts

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