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China boosted Q1 crude oil storage as imports flatlined: Russell

China increased the rate at which it added crude to stocks in March as the world's greatest oil importer grabbed record imports from Westernsanctioned Russia.

An overall of 790,000 barrels each day (bpd) were contributed to China's commercial or strategic stockpiles in March, up from the 570,000 bpd over the very first 2 months of 2024, according to calculations based on official data.

Over the first quarter as an entire, China increased inventories by 670,000 bpd, a figure that to some extent undermines the dominating market view that China's oil need is strong.

This is especially the case since China's unrefined imports were really slightly weaker in the first quarter of this year at 11.02 million bpd, down from 11.06 million bpd in the exact same duration in 2023.

China does not disclose the volumes of crude flowing into or out of strategic and commercial stockpiles, but a quote can be made by subtracting the amount of unrefined processed from the overall of crude available from imports and domestic output.

The total crude available to refiners in March was 15.88 million bpd, consisting of imports of 11.55 million bpd and domestic output of 4.33 million bpd.

The volume of unrefined processed by refiners was 15.09 million bpd, leaving a surplus of 790,000 bpd to be contributed to storage tanks.

For the very first quarter, the overall crude readily available was 15.31 million bpd, while refinery throughput was 14.64 million bpd, leaving a surplus of 670,000 bpd.

The photo that emerges from the first quarter is that China's need for imported crude oil was virtually flat, and that refiners are still increasing stockpiles even as prices start to increase.

It's worth keeping in mind that the crude that landed in China in March was likely organized in a window starting from late December through to early February, a time when crude costs were still lower than their 2023 peaks and had yet to commence their current rally.

Criteria Brent futures dropped to $72.29 a barrel on Dec. 13, the most affordable considering that June, having been on a down trend given that the 2023 peak of $97.06, reached on Sept. 27.

Because the December low, Brent at first stayed in a broad range around $75-$ 85 a barrel, before breaking greater from mid-March to reach a 2024 peak of $92.18 on April 12, amidst continuous issue about an escalation of stress in Middle East emerging from the conflict between Israel and Hamas.

Brent closed at $87.42 a barrel on Wednesday, after financial data from China showed the economy grew more than anticipated in the first quarter however other indicators, such as residential or commercial property financial investment, retail sales and commercial output stayed weak.

The concern for the marketplace is whether China's economy is on the roadway to healing, and for that reason oil need will enhance in coming quarters.

And even if crude demand does accelerate, will China purchase more from the seaborne market even though prices have actually risen, or will it turn to the stockpiles it has built in the very first quarter.

RUSSIAN OIL

While China's refiners do not reveal what grade or origin of crude is being contributed to inventories, it's likely that Russian oil is one of the primary types being saved.

China's imports from Russia in March were 1.51 million bpd from the seaborne market and 890,000 bpd via pipeline, providing a. combined total of 2.4 million bpd, according to date compiled by. LSEG Oil Research.

This was up from 2.19 million bpd in February and was the. highest level of imports from Russia given that China ramped up. purchases in the wake of Moscow's February 2022 invasion of. Ukraine, which led discounts on Russian crude as Western countries. enforced sanctions.

In contrast to greater arrivals from Russia, China's imports. from its former top provider Saudi Arabia dropped to 1.59. million bpd in March, the most affordable given that December, according to. LSEG.

The move to Russian crude supports the view that China's. refiners are maximising imports of more affordable grades, which also. consist of oil from Iran and Venezuela.

The opinions revealed here are those of the author, a columnist. .

(source: Reuters)