China may be bolstering its emergency crude reserves as refiners in the world’s second-largest oil consumer expanded commercial stockpiles to a record high in May.
Crude inventories rose 4 percent from April, China Oil, Gas & Petrochemicals, published by the official Xinhua News Agency, said in an e-mailed report today. That’s about 33.59 million metric tons, or 246.2 million barrels, the most in records going back to January 2010. Gasoline supplies also swelled to a record, climbing 0.9 percent to an estimated 7.6 million tons.
China’s commercial oil stockpiles can be channeled for strategic use, according to industry consultants including ICIS-C1 Energy in Shanghai and FGE in Singapore. Refiners accelerated crude imports in April and May as the nation sought to increase its energy security with prices at a “fairly” high level, said Amy Sun, an oil analyst at ICIS-C1.
“We believe high commercial stocks may indicate refiners are potentially stocking feedstock for the government,” she said by phone from Guangzhou today. “China may be taking this opportunity to start filling strategic storage.”
OGP said its inventory data excludes supplies in national reserves, while the Chinese government doesn’t publicly release strategic stockpile figures.
Brent crude, the benchmark grade for more than half the world’s oil, gained 1.2 percent in London trading in May and has advanced 4 percent this month to about $114 a barrel.
China, which trails only the U.S. in consumption, is also maximizing its gasoline production amid rising domestic demand and improved refining margins, Ye Manman, another ICIS-C1 analyst, said by phone today. Auto sales in May climbed 13.9 percent from a year earlier to 1.59 million units, according to data from the state-backed China Association of Automobile Manufacturers.