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China’s Crude Oil Buying Spree Looks Set To Continue

General discussions of the systemic, societal and civilisational effects of depletion.

China’s Crude Oil Buying Spree Looks Set To Continue

Unread postby AdamB » Fri 13 Oct 2017, 22:40:34


China has built its crude oil stockpiles at a record pace in 2017 and while its purchases could tail off towards the year-end, inventories could hit the billion-barrel mark in six months, the International Energy Agency said. China has spent around $24 billion on building its crude reserves since 2015, at an average of $50 a barrel, and now holds around 850 million barrels of oil in inventory. While China's spending on "excess" crude is tiny, given its $680 billion current account surplus since early 2015, its inventories are now equal to those of Japan and South Korea together, the Paris-based IEA said. Those countries' combined demand is half that of China. "Our calculations imply that the country’s import cover stands at about 90 days, while total demand cover is about 60 days," the agency added. Chinese oil stocks are opaque and data on ...


"China's Oil Buying Spree"
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: China’s Crude Oil Buying Spree Looks Set To Continue

Unread postby Tanada » Sat 14 Oct 2017, 07:37:02

Given that China has added about 25,000,000 new cars by the end of this year in addition to the 20 million in 2016, 17 million in 2015 and 14 million in 2014 why would anyone think it odd they are building up their petroleum inventory?

China is importing 8.44 MM/bbl/d of crude oil so far this year. Last week the USA imported 7.6 MM/bbl/d. At the same time the USA was maintaining a commercial crude stockpile of 1,750 MM/bbl at the start of 2014 for a total fleet of 256 MM motor vehicles. As of the end of last year China already had 290 MM motor vehicles and their fleet tends to be both younger on average and building at a fast rate compared to the USA. The logical conclusion is China should have a larger petroleum commercial inventory that the USA and it should keep growing along with the size of their ICE vehicle fleet. Just to reach parity with American commercial inventories they still need a very substantial increase in their inventory, more than double where it stands today.

The days when China was a minor players in the world petroleum market passed almost a decade ago, yet somehow the mainstream media remains clueless. As the glut subsides the world of 2018-2020 is going to be a very different crude market situation that we faced in 2010-2014 when fracking was a rapidly growing portion of world oil supply and optimism about future supply was boundless. In three years China has increased their total ICE vehicle fleet 51 Million vehicles and the rate of increase is still going up substantially every year.

If anything logic would tend to indicate China will continue to have a substantial build in inventory for quite some time in the future as they move to accommodate their rapidly growing fleet. What this means for the world economy should be pretty obvious, as soon as the glut dissipates the price of oil is going to jump a substantial quantity. IMO this is going to happen much sooner than the EIA/IEA is predicting because we are already seeing substantial draws on commercial stockpiles in Europe and North America even as the Chinese stocks are growing.

Put that data together and what do you get? The glut is pretty much a done deal, the USA is normally having peak inventory around this time of year in preparation for heating season and YOY total available crude stocks are down substantially from last year on this date. The second week of October 2014 the raw EIA number for this date was 1,828 MM/bbl. Correct with a -30 for the change in calculation method put in place August 2016 and you get 1,798 MM/bbl. Current number from EIA is 1,965 MM/bbl, a difference of 167 MM/bbl of 'extra' inventory. This is a substantial decline from YOY when the number of 2016 was 2,039 MM/bbl or 74 MM/bbl greater than the current number. Traditionally this is the time of year when numbers are climbing but instead we have declined somewhat from the January 2017 number of 2,017. That might not sound like much until you realize we typically grow from January to October by roughly 35 MM/bbl and this year we declined by 52 MM/bbl. IOW the expected number for current levels would have been 2,052 if we had gone through the typical build cycle over late summer in preparation for winter.

Clearly the glut is dissipating even faster than it built up in 2014-2015. We only went down 3 MM/bbl in total inventory from January to December 2016 which is well within the statistical noise but if current trends continue the January 2017 to end of December 2017 numbers will show a substantial decline in total USA crude inventory, quite likely enough to erase all the builds from 2014 and a portion of the build from 2015 as well. That means going into 2018 we will have the lowest Petroleum Inventories we have had in 3 years aka no more glut holding prices down by the end of first quarter.

So enjoy the next six months while it lasts.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Oil imports by China could lead to zero-sum game

Unread postby AdamB » Thu 25 Jan 2018, 12:18:18


One of the assumptions most observers of the crude oil market make is that China will continue to be the engine of global demand growth, thereby providing underlying support to prices. It’s not an unreasonable assumption, given that the world’s largest importer brought in 8.4-million barrels per day in 2017, 10.1% more than in the prior year, according to customs figures. The extra 800,000 barrels per day China imported in 2017 was about half of total global demand growth. However, there are increasing signs that China’s crude oil imports are moving toward becoming a zero-sum game, insofar as much of the rise in imports is being exported as refined fuels. A zero-sum game is when the gains of one group are cancelled out by the losses of another. While China isn’t exporting every extra barrel of crude it imports as refined products, it is increasing


Oil imports by China could lead to zero-sum game
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: China’s Crude Oil Buying Spree Looks Set To Continue

Unread postby Outcast_Searcher » Thu 25 Jan 2018, 13:06:52

Tanada wrote:Given that China has added about 25,000,000 new cars by the end of this year in addition to the 20 million in 2016, 17 million in 2015 and 14 million in 2014 why would anyone think it odd they are building up their petroleum inventory?

Yup. And as thus far, indications are that China's economy is improving recently, so much for the idea that consumers can't afford oil products with crude at $40. Or $60 in fact. And the way things are going and with current global demand forecasts, perhaps $80ish in a year or so. And China isn't even a first world country.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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