Record Oil Imports Take China Closest Ever to Passing U.S.
China’s record crude imports last month brought it the closest ever to surpassing the U.S. as the Asian country boosts emergency stockpiles and America’s shale boom reduces the need for oil from overseas.
China bought 7.19 million barrels a day of foreign oil in December, data released by the General Administration of Customs in Beijing showed yesterday. The U.S. imported about 7.53 million a day on average over that period, according to the Energy Information Administration. The difference was the smallest on record for monthly purchases by the world’s two largest oil consumers, the data show.
China is seeking to benefit from the global oil price slump as the world’s second-biggest economy seeks crude to fill strategic reserves and refiners expand capacity amid rising demand. In the U.S., the need for imports declined as output surged to the most in more than three decades after supplies were unlocked from shale formations including the Bakken in North Dakota and the Eagle Ford in Texas.
While China may become the biggest crude importer over a single month this year, its total annual purchases may take a few years to top the U.S., according to SCI International, a Shandong-based consultant.
The Asian nation’s imports are gaining “as it ramps up its emergency stockpile reserves, while the U.S. is curtailing its dependence on imports on the back of rising light-oil production,” Gao Jian, an analyst at SCI, said by phone today. “China will ultimately exceed the U.S., maybe in a few years as its domestic output growth stays short of demand growth.”
Brent crude, the benchmark for more than half the world’s oil, slid to the lowest level since March 2009 yesterday, after plunging almost 50 percent in 2014 amid a global supply glut. The February contract was at $45.86 a barrel today.
Foreign Barrels
China’s imports averaged about 6.2 million barrels a day over 2014, compared with 7.4 million a day in the U.S., government data compiled by Bloomberg show.
The unprecedented U.S. shale boom has reduced its need for crude imports, with foreign barrels accounting for 43 percent of the oil in its refineries, the lowest level since 1992. Exports climbed to 502,000 barrels a day in November, the most in EIA and Census Bureau statistics dating back to 1920. The country’s production last month climbed to 9.14 million a day, the highest since at least January 1983.
In China, a record 60 percent of consumption was met with overseas purchases last year, according to ICIS-C1 Energy, a Shanghai-based commodities researcher.
The nation will hoard about 7 million metric tons of crude this year for its emergency stockpile, bolstering a demand growth rate of 5 percent, ICIS predicted. It currently holds reserves equivalent to about 30 days of imports and the government is seeking to boost that level to 100 days by 2020, according to China Petrochemical Corp., Asia’s biggest refiner.
Refining Capacity
Refining capacity will climb to 14 million barrels a day by the end of 2015, said China National Petroleum Corp. That’s about 78 percent of what’s currently available in the U.S., data compiled by Bloomberg show.
“If you compare the two countries’ reliance on imports, China has more incentive to increase that reliance than the U.S.,” said Lin Boqiang, a director of the Energy Economics Research Center at Xiamen University.