China turns top global crude importer in first quarter
Buying was boosted by stockpiling and purchases by the country’s independent oil refiners, which raised their processing of imported crude to a record last month
China’s record oil imports in March helped it top the US as the world’s biggest buyer during the first quarter as stockpiling and aggressive buying by refiners coincided with slumping domestic production.
The world’s largest energy consumer imported 9.21 million barrels a day, up 11 per cent from February, according to Bloomberg calculations based on data Thursday from the General Administration of Customs. Shipments during the first quarter rose 15 per cent to almost 105 million tonnes, or about 8.5 million barrels a day. The US imported almost 8.15 million during the first three months, Bloomberg calculations using weekly data show.
While the jump in March was seen as temporary, growing use of transportation fuels, new refineries and an organisation of petroleum exporting countries definition.
Buying last month was likely boosted by stockpiling and purchases from the country’s independent oil refiners, which raised their processing of imported crude to a record last month, according to analysts from ICIS China, Citigroup and Energy Aspects.
“We could see a sharp drop in April following this surge,” Li Li, a research director with ICIS China, said by phone.
March shipments will result in a “fairly high” stockpile buildup and likely flowed into tanks leased for the country’s strategic petroleum reserves as the start of the newest government-owned storage is delayed, Citigroup analysts including Tracy Liao said in a note Thursday.
“Teapot buying was strong in March, although the strength does surprise us,” said Virendra Chauhan, an analyst at London-based Energy Aspects, using the industry term for independent refiners. “We don’t think 9 million barrels a day is a level that is likely to be maintained and helps explains why buying has eased up and regional markets have softened.”
China’s daily production in the first two months of this year declined 8 per cent year on year after falling at a record pace in 2016 as the country’s energy giants shut high-cost wells at older fields. The nation had to import more oil to fill the gap, according to SCI International, a Shandong-based commodity researcher.
“Lower crude output is a boon for imports, which will be sustained this year unless the oil price stays above US$60 a barrel,” Gao Jian, an analyst with SCI International, said before data were released.
Rising capital spending by China’s three major energy companies probably won’t be enough to return the nation’s production to growth this year, the International Energy Agency said Thursday in its monthly oil market report.
“While the increased spending will surely slow declines, natural depletion cannot be reversed rapidly at the country’s mostly mature fields,” the IEA said.
Brent crude, which averaged the cheapest in more than a decade last year amid a glut, has rebounded above US$50 a barrel this year as the Organisation of Petroleum Exporting Countries and 11 other nations started trimming supply.
On a monthly basis, China imported 38.95 million tonnes of crude, the data showed. Net product exports rose 5.4 per cent from February to 1.97 million tonne.