China’s crude oil stocks climbed in October as crude supply rose to a historical high, outstripping the increase in refinery throughput, which delivers another big blow to the slumping oil price.
By the end of October, China’s oil inventory rose by 29.09 million barrels from a month earlier, 416.7 per cent higher than the build in September, and contrasted sharply to a draw of 26.81 million barrels in the same month last year, S&P Global Platts calculations based on official data showed.
The company expected the stockpile to continue building in November on high crude oil imports amid a slowdown in refinery throughput.
China’s overall crude supply in October surged 21.3 per cent from a year earlier to 415.96 million barrels, and rose 8.9 per cent from September led by a sharp increase in net crude imports while domestic crude output was largely rangebound.
Buoyed by strong buying from the independent sector, China’s net crude imports soared 32.2 per cent year on year to 298.02 million barrels in October, data released by the General Administration of Customs showed.
Crude throughput at refineries rose 4.6 per cent year on year to a record high of 386.88 million barrels in October, data released by the National Bureau of Statistics showed. But the increase lagged the sharp growth in crude supply.
This means monthly crude supply was 29.09 million barrels higher than throughput in October.
By the end of October, China’s crude stocks rose 197 million barrels compared with the level at the end of December last year, which compares with 266 million barrels a year earlier.
China’s crude stocks are expected to rise substantially in November due to continuously high crude imports by the year-end and a slowdown in throughput amid weakening oil product demand.
Platts data showed crude cargoes for delivery to Chinese ports in November are likely to rise 2 per cent from October to 8.89 million barrels per day.
Crude imports by the independent sector rose 28 per cent month-on-month to a seven-month high of 2.2 million b/d in October, according to a Platts survey.
Independent refineries typically try to use up their crude oil import quotas before the end of the year, so that they can secure full allocations for the next year. After taking October deliveries into account, around 40 million mt is still available for the November-December period, Platts data showed.
Meanwhile, “refining demand is weakening as the peak season for oil products will nearly end in winter, while they are not allowed to send more products to overseas in Q4,” the analyst added.
Refining sources from both the state-owned and independent sector said they have seen a slowdown in gasoline sales amid high production in October and weak domestic demand.
State-owned and independent refineries account for around 75 per cent and 25 per cent of China’s total refining capacity, respectively.