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China continues to lift petroleum stockpiling amidst weak refinery runs: Russell

The world's. biggest crude importer has actually had a soft start to the year.

China added more than 1 million barrels daily (bpd) of. petroleum to stockpiles in May as soft imports were exceeded. by even weaker refinery processing volumes.

An overall of 1.08 million bpd was added to China's commercial. or tactical stocks in May, up from 830,000 bpd in April,. according to computations based on official data.

Over the very first 5 months of 2024, China improved stockpiles. by 790,000 bpd from the exact same duration in 2023, and the rate of. stock constructs is speeding up, rising from 700,000 bpd in the. initially 4 months of the year.

The rise in crude streaming into storage, coupled with a. decrease in oil imports in the very first five months of the year,. undermines expectations that China's unrefined need will grow. highly in 2024.

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

The overall crude available to refiners in May was 15.33. million bpd, consisting of imports of 11.06 million bpd and. domestic output of 4.27 million bpd.

The volume of crude processed by refiners was 14.25 million. bpd, leaving a surplus of 1.08 million bpd to be contributed to. storage tanks.

Refinery throughput dropped from 14.30 million bpd in April. and from 14.60 million bpd in May last year.

May was likewise the 2nd consecutive month that refinery. processing decreased from the same month a year earlier.

For the very first five months of the year refineries processed. 301.77 million metric loads, according to information released on Monday. by the National Bureau of Stats, up 0.3% from the exact same. period in 2023.

However, converting the refinery processing to barrels per. day shows a rate of 14.49 million bpd in the January to May. period, which is really down from the 14.54 million bpd in the. same duration in 2015, which was one day shorter since of the. leap year in 2024.

BETTER 2ND HALF?

Crude oil imports were 11.0 million bpd in the first 5. months of the year, down 130,000 bpd or 1.2% from the very same. duration in 2023.

Refinery processing has dropped by 50,000 bpd, and 790,000. bpd has been contributed to inventories.

There are some short-term aspects behind a few of the weak. outcomes, such as a number of significant refineries going through scheduled. maintenance in May, but it's difficult to leave the conclusion that. so far this year China's oil need is falling well except. expectations.

The Organization of the Petroleum Exporting Countries (OPEC). is still anticipating that China will drive global oil need. development in 2024, accounting for 720,000 bpd of the world overall. boost of 2.2 million bpd.

While OPEC's June regular monthly report does show the manufacturer. group is expecting a more powerful 2nd half in China, it also. programs that the first half is running well behind expectations.

OPEC forecast China's oil need growth at 570,000 bpd in. the 2nd quarter, which would require a surge in June imports,. given the soft outcomes in April and May.

While OPEC stays bullish on China's need, other. forecasters are more scrupulous, with the International Energy. Agency anticipating need growth of around 500,000 bpd in 2024.

Even this more modest forecast will require a strong 2nd. half, and will be dependent on China's economy not only gaining. momentum, however doing so in locations that improve the intake of. fine-tuned products.

This means construction will have to increase to increase diesel. need, flight will have to continue to recuperate to raise jet. fuel sales, and manufacturing will need to strengthen to. boost need for petrochemicals.

A stronger Chinese economy stays likely in the 2nd. half, but the concern is whether it will be strong enough to. permit the bullish expectations for oil need to be correct.

The viewpoints expressed here are those of the author, a columnist. .

(source: Reuters)