China closing in on US as Worlds Largest Crude Oil Importer

Published Date : Oct 20, 2015

As China inches closer to the United States in becoming the largest importer of crude oil in the world, the stockpiling of cheap oil and demand from private refiners is anticipated to maintain imports at a record level despite the instability in the third quarter of the year.

Even after the slow growth rate over the past few months, purchasing for delivery in October November has picked up a strong pace, according to analysts and traders. In September, crude imports went up by only 1.3 per cent compared to a year earlier. 

Analysts said that the buyings will put to rest concerns of a major slowdown in Chinese purchases and support prices over the next few months. 

The rising purchases have reflected in freight rates as well as tanker movements, according to 
Virendra Chauhan, analyst at Energy Aspects. Analysts are upgrading their previous estimates for growth in the second half of the year. 

Analyst at FGE, an oil consultancy, Wendy Yong said that even though the Chinese economy has been slowing down, the imports of crude oil continue to remain robust against the backdrop of growing stockpiling activities into commercial storage and operating. 

Since July, China has also given small refiners almost 700,000 barrels of crude import quotas a day, which amounts to approximately 10 per cent of the total imports of China presently. This is part of efforts to increase competition and gain private investments, which will develop a new demand source. 

Small refiners, or teapots as they are known, are extremely active, according to an oil trader, and most of them have been competing against each other in order to fill their latest quotas. 

In addition, state owned refiners have already begun restocking after the lull in the third quarter.