By Clyde Russell
LAUNCESTON, Australia- China’s flow of crude oil into inventories faded over the second half of last year as the world’s top importer reduced purchases in response to higher prices.
China’s available crude was almost in balance with refinery processing in November, with a statistically insignificant 20,000 barrels per day (bpd) being added to inventories.
China doesn’t disclose the volumes of crude flowing into or out of strategic and commercial stockpiles, but an estimate can be made by deducting the amount of crude processed from the total of crude available from imports and domestic output.
The total volume of crude available to refiners in November was 14.51 million bpd, consisting of imports of 10.33 million bpd and domestic production of 4.18 million bpd.
Refinery throughput was 14.48 million bpd, down from 15.05 million bpd in October and the lowest daily level since the January-February period in 2023.
Subtracting the refinery processing from the total available crude leaves a gap of just 20,000 bpd of crude that went into storage tanks, down from the 560,000 bpd that went to stockpiles in October.
However, October was something of an aberration as China’s flows of crude into storage slowed sharply over the second half of 2023.
In the five months from July to November a total of about 240,000 bpd was added to inventories.
In two of those months, July and September, China’s refineries actually processed more crude than what was available from imports and domestic output, thereby drawing on inventories.
The weak storage flows in the July to November period are in stark contrast to the robust additions in the first half of the year, when 950,000 bpd was added to stockpiles.
This means that flows into storage tanks dropped by 710,000 bpd in the July to November period from what was added in the first six months of 2023.
The sharp slowdown is a reflection of lower imports, rather than a drop in refinery processing.
China’s crude imports have eased in the second half, most likely as a result of the higher global prices for oil, largely sparked by the decision in late June by OPEC+ leaders Saudi Arabia and Russia to jointly cut output by a further 1.3 million bpd.
That move sent benchmark Brent crude futures from a low of $71.57 a barrel on June 28 to a high for 2023 of $97.69 on Sept. 28.
