Rare Peek at China’s Emergency Oil Reserve Data Shows 22.5% Gain

  • Strategic reserves grew to 234 million barrels in early 2016
  • Second government update on strategic storage data in 9 months

China reported it added about 43 million barrels of crude to its strategic reserves between the middle of 2015 and early this year, in a rare release of such data by the world’s second-biggest oil user.

The statement posted on the website of the country’s National Bureau of Statistics is the first update the government has given on its reserves since December. The emergency stockpiles has been a source of speculation this year among analysts and traders, who rely on customs figures and infrequent construction updates to estimate how much of the country’s imports go into its strategic inventories, and for how long it will continue to fill them.

The reserves totaled 31.97 million tons as of early 2016, equivalent to about 234 million barrels, the statistics office said Friday. In December, it reported 26.1 million tons as of mid-2015, about 191 million barrels. The bureau named seven above-ground sites and one underground storage cavern utilized as of early 2016, as well as commercial storage tanks, unchanged from mid-2015.

“The expanded volumes indicate the government has possibly put more strategic reserves into commercial tanks,” Amy Sun, an analyst with Shanghai-based commodities researcher ICIS-China, said by phone. “The fact that the number of sites has remained at eight also indicates the government has been slow building these tanks, despite the persistent stockpiling momentum amid low oil prices.”

Analyst Split

China has boosted its crude imports to a record 7.5 million barrels a day on average this year, at times overtaking the U.S. as the world’s largest purchaser of foreign oil. The buying binge, along with supply outages, helped crude prices recover from a 12-year low over the first half of the year.

China’s lack of regular updates about its stockpiles has led to splits among analysts over whether that demand can continue to help rebalance the oil market. JPMorgan Chase & Co. said it expects the reserves to be mostly full during the second half of this year, causing demand to drop by 1.2 million barrels a day. Energy Aspects Ltd. has said demand for reserves will only drop by 100,000 barrels a day in the second half of the year from the first half.

— With assistance by Sarah Chen, and Dan Murtaugh

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