China cuts oil inventories as market eye large export shares

(Bloomberg) — China has begun reducing its crude oil stocks, which may indicate that refineries are preparing to boost fuel exports as part of the government’s efforts to revive the economy.

Emma Lee, analyst at Vortexa Ltd. Onshore crude stocks were at 909 million barrels as of September 15, the lowest level since May 12. About 1 million barrels per day have been withdrawn from stocks over the past three weeks. . Satellite data company Ursa Space Systems put the figure at 1.05 billion barrels, down 7.5 million barrels from the previous week, and the fourth weekly draw in five, according to analyst Jeffrey Craig.

The reduction may only be seasonal, but it could also be an indication that processors are increasing operating rates in anticipation of a push to produce and export more fuels, including gasoline and diesel. Refiners and traders have applied for an additional 15 million tons of export quotas, which, if approved, would raise allocations so far this year to a level similar to the level seen during the whole of 2021.

National oil companies are considering raising their utilization rates from 10% to 15% next month, according to a note from industry consultant FGE, although the award of additional quotas is still subject to maneuvering between various government departments, Energy Aspects Ltd. said.

Meanwhile, JP Morgan Chase & Co. said it believes China is unlikely to agree to this level of exports, describing the applied quantities as excessive.

Oil refining activity has remained stable near epidemic-era lows in recent months. China has been slow to use its stockpile of crude oil due to a weak economy and strict government controls on viruses, which have stifled transportation fuel use and slowed demand for petrochemicals.

today’s events

(All times Beijing unless otherwise noted)

  • IEA webinar on the transformation of China’s electric power sector, 15:00
  • Discussions of the Committee on the Future of Gas of the EU-China Energy Cooperation Platform, focusing on security of supply and carbon sequestration, 15:00
  • China Mining Conference and Exhibition, online, first day

Today’s planner

Bloomberg Economics says the downturn in the metal-intensive Chinese property market appeared to deepen in July and August. New mortgage rate cuts and efforts by local governments to generate housing demand have failed to gain traction, and the sector is poised for a painful long-term adjustment. Decisive policy steps may be needed to prevent a crash scenario.

Housing demand is in deep recession

on the wire

  • Kerry sees possible thaw in frozen US-China climate talks
  • China’s Unipec buys West African and Brazilian oil as immediate demand gains
  • Taiwan buys $600 million worth of corn in Iowa as US-China tension drinks
  • Chinese mineral producers expand their stakes and develop acquired mines
  • Nickel Industries signs a cooperation agreement with QMB New Energy
  • Senators Call for Secondary Sanctions on Russian Oil Purchases
  • China shovels cheaper Argentine soybeans as harvest begins in US

next week

Thursday, September 22

  • Discussions of the Committee on the Future of Gas of the EU-China Energy Cooperation Platform, Focusing on Competitive Markets and Renewable Gas, 15:00
  • China Mining Conference and Exhibition, online, second day
  • USDA Weekly Crop Export Sales, 08:30 EST

Friday 23 September

  • Bloomberg China Economic Survey for September, 10:00
  • China iron ore weekly stocks
  • Shanghai Stock Exchange Weekly Commodity Inventory, ~ 15:30
  • China Mining Conference and Exhibition, online, third day

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