China Crude Imports Hit Record as Price Crash Boosts Buying

Thummel: Oil Could Reach $50 By End of 2016
  • Inbound shipments jump above 8 million b/d in February
  • Oil product exports slip second month to nine-month low

China’s crude imports rose to a record as oil’s crash to the lowest in more than 12 years boosted buying.

The world’s biggest energy user increased inbound crude shipments in February by 19 percent from the previous month to 31.8 million metric tons, according to data from the Beijing-based General Administration of Customs on Tuesday. That’s equivalent to about 8.04 million barrels a day, the highest daily average on record. Oil product exports slid a second month to 2.99 million tons, the lowest since May.

Crude imports rebounded from a three-month low in January, when Brent oil fell below $28 a barrel to the weakest since November 2003. The international crude benchmark was trading at $40.34 a barrel at 12:24 p.m. in Shanghai on Tuesday. China took advantage of the oil price collapse last year to build up oil reserves and inbound shipments may rise this year after independent refiners were granted import licenses.

"The reported crude imports last month greatly exceed our expectations," Gao Jian, an analyst with SCI International, a Shandong-based commodity researcher, said by phone. "Weak international crude prices that fell below $30 a barrel in January may have boosted Chinese refiners’ appetite for imports."

$40 Floor

The government’s decision not to cut retail fuel prices when oil falls below $40 a barrel has made domestic sales of oil products more profitable compared with exports, according to ICIS China, a Shanghai-based researcher.

"The $40 price floor for domestic fuel sales is curbing shipments overseas," Amy Sun, an analyst with ICIS China, said by phone. "Exports will probably remain subdued."

Stockpiles of diesel, a barometer of the country’s industrial activity, increased 6.7 percent in January from a month earlier, according to the latest data from China Oil, Gas & Petrochemicals newsletter run by the official Xinhua News Agency.

— With assistance by Jing Yang

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