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World’s Biggest Oil Importer Is Running Out Of Storage

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When the bottom fell out of international crude oil markets earlier this year, global oil storage was at a premium. In the United States, finding sufficient crude oil storage became such a challenge that the West Texas Intermediate crude benchmark plummeted below zero on April 20, ending the day at -$37.63 per barrel, meaning that you would essentially be paid $40 to take a barrel of oil off of someone’s hands.  China, however, soon busied itself stocking up on cheap oil, to the extent that Beijing played a key role in the global oil market’s recovery by helping to buy off a significant portion of the world’s severe oil glut. This is not to say that China’s government was alone in taking advantage of historically low oil prices or buying up oil in an attempt to salvage their own struggling energy sector. Back in March, the United States government pledged to support domestic oil producers by buying 30 million barrels of oil for the nation’s Strategic Petroleum Reserve. “But analysts said that China’s stockpiling dwarfs what other nations have done in response to cheap prices,” writes CNN. Matt Smith, director of commodity strategy at ClipperData, told CNN’s reporters that “China is the only country that has been buying like crazy. They went out and bought the dip.”

In fact, China went out and snapped up cheap crude at such a breakneck place that they now have their own critical oil storage issue. International news has been reporting for weeks on China’s jam-packed waterways filling up with crude tankers. On July 1 CNN reported that “China bought so much foreign oil at dirt-cheap prices this spring that a massive traffic jam of tankers has formed at sea waiting to offload crude” as the country’s purchases begin to arrive. “China’s so-called floating storage — defined as barrels of oil on vessels waiting for seven days or longer — has nearly quadrupled since the end of May, according to ClipperData. Not only is that the most on record going back to early 2015, it’s up seven-fold from the monthly average during the first quarter of 2020.”

Related: China Inks Military Deal With Iran Under Secretive 25-Year Plan

The vast majority of the oil arriving to China in recent weeks was purchased in April and May, when low prices spurred a shopping spree. “The hoarding of oil at sea is a reflection of China’s bargain-hunting during a time of extreme stress in the energy market,” writes CNN. According to the report, the oil tanker issue crowding China’s seas is not, however, because mainland storage is already at capacity, but simply because they can’t get it there fast enough. ClipperData’s Smith said that onshore storage could still take on a lot more crude, and that the current issue is “simply related to terminal congestion. They’ve got so much coming in that they can’t bring it onshore quickly enough.”

This week, however, at least one Chinese news outlet is telling a different story. While China’s onshore storage may not be full, they say, it’s getting dangerously close. Just this week, Beijing-based media group Caixin reported that “China is almost out of space to hold the oil that domestic traders bought at bargain-basement prices earlier this year when the Covid-19 pandemic crushed global crude demand.”

Caixin’s reporting is based on numbers provided by Oilchem China, which show that, as of Wednesday, Chinese crude oil storage was at 69 percent capacity “with the 33.4 million tons it had stockpiled, up by 24% from the previous year.” This is dangerously close to overflow. “That’s only 1 percentage point away from the 70% threshold that experts view as the country’s capacity limit,” reports Caixin.

And this stockpile will likely continue to grow, surpassing even May’s massive intake. “The situation, which has also been exacerbated by low turnover, is most prominent in East China’s Shandong province, one of the country’s oil refining hubs. Oil tankers have to wait 15 to 20 days there before they are able to offload their cargos,” says Caixin. The amount of oil held in storage may peak later this month as the country’s demand for fuel continues its slow march to recovery, but if not, this could spell big trouble for China’s storage sector.

By Haley Zaremba for Oilprice.com



112 Comments on "World’s Biggest Oil Importer Is Running Out Of Storage"

  1. Abraham van Helsing on Sat, 11th Jul 2020 7:11 am 

    Readability of this thread on mobile devices ruined by the digital illiterate parasite by pasting too large links and not having the civility to use tinyurl

    “Duncan Idaho on Fri, 10th Jul 2020 6:51 pm”

    Ha, duncan, civility, that I not laugh.

  2. Davy on Sat, 11th Jul 2020 8:00 am 

    By solar, I mean the sun beats down on my broken down stuff heats up whatever I left inside before I stopped paying my utility bills. It smells bad, just like me. But sunshine as they say is free. Not that I go outside much. Neutering junapee and thinking up new ways to get him deported and banned leaves me no time to worry bout stupid things like not having a working fridge or freezer.

  3. Davy on Sat, 11th Jul 2020 8:22 am 

    JuanP on Sat, 11th Jul 2020 8:00 am

    “By solar, I mean the sun beats down on my broken down stuff heats up whatever I left inside before I stopped paying my utility bills. It smells bad, just like me. But sunshine as they say is free. Not that I go outside much. Neutering junapee and thinking up new ways to get him deported and banned leaves me no time to worry bout stupid things like not having a working fridge or freezer.”

    You said it juanPee, that is your life in your cheap run-down condo in Miami Beach. The armpit of the world is where you live. You don’t have a sailboat, a farm, and no bug out place in South America. You don’t teach yoga. These are fantasies of your multiple personalities. You are a lonely mentally ill loser. It is delicious to dunk your dumbass daily.

  4. FamouseDrScanlon on Sat, 11th Jul 2020 8:32 am 

    juanPee, child, you should bring up in your therapy sessions your mistake of trolling Davy. He has ruined your life. You are now a raving maniac who trolls 20/7 obsessively

  5. Davy on Sat, 11th Jul 2020 9:16 am 

    Oops, sorry y’all.

    LMFDAO!

  6. The board on Sat, 11th Jul 2020 9:35 am 

    JuanP on Sat, 11th Jul 2020 9:16 am

    “Oops, sorry y’all. LMFDAO!”

    juanPee, all you have is that?! ROTFLOL

  7. dunked on Sat, 11th Jul 2020 9:51 am 

    juanPee handed his ass:

    Re: Sin Tax
    https://peakoil.com/forums/viewtopic.php?p=1453802#p1453802

    Unread postby mousepad » Sat 11 Jul 2020, 10:47:38

    JuanP wrote:

    One random street view of one specific place is not representative of a nation in any way.
    I could show you millions of views of the United States that are worse than anything you could possibly find anywhere in Uruguay, and I am not exaggerating; I mean that literally.

    That is true. One sample is not enough. So I made a test. I randomly looked at 10 street view locations of montevideo and 10 street view locations of Chicago (I consider Chicago the fusion of a shit and a hell hole).
    Of my random probing I found more streetviews of montevideo which made a shady impression.

    I agree there are miserable places in the USA, but unless you know exactly where to look, it’s hard to find them by chance. The well known towns of Camden or Gary come to mind. But even then you have to pick the street pretty carefully to find scary ones.

    Unlike you, I actually know both countries very well. Have you ever been to Uruguay?

    That’s true. I hope to be able to go there sometimes. I once even inquired with the university in montevideo for a ph.d in engineering. My family didn’t want to join me, so I dropped it. Maybe I should have forced them to go? I’m sure I would have loved the countryside, the city probably not so much.

    Uruguay is NOTHING like Mexico in any way.

    Same language, same religion, same style of concrete houses with bars in front of windows. It has a lot of similarities.

    I have actually traveled across Mexico, too. Have you ever been to Mexico?

    Yes. I’ve been to the rich tourist destinations as well as the poor mountain towns hardly accessible. I have family there. Pretty much subsistence farming in the mountains. It’s a tough life. You wouldn’t know anything about a tough life, would you? I hear you rich, coming from military junta who stole the money from the gents, and then had to exile to the US.

    Your comment is full of falsehoods, inaccuracies, and lies, and doesn’t contribute anything useful to the conversation. I would obviously be wasting my time if I continued this discussion, so as far as I am concerned you can keep your wrong, ignorant, inaccurate opinions.

    You love Uruguay very much, I can tell. You go ballistic emotional on anything criticizing it.
    You are a true latino. All emotions, little logic.

  8. REAL Green on Sat, 11th Jul 2020 10:00 am 

    Everyone no’s mousepad is another one of are socks Davy.

  9. FMR-19 whitey supertard pastor CHUCK-19 BALDWIN-19 wrote about CONVICT-19 the biggest global on Sat, 11th Jul 2020 10:13 am 

    HoAX-19

    please wear your face diaper
    please love supremacist muzzies more

  10. 35 troops killed in Nigeria jihadist "muzz" ambush, 30 missing: new toll on Sat, 11th Jul 2020 10:15 am 


    supertards
    please love supertard
    please love supremacist muzzies more
    please wear your face diaper

    CONVICT-19 gona kill us all

  11. REAL Green on Sat, 11th Jul 2020 10:33 am 

    JuanP on Sat, 11th Jul 2020 10:00 am

    “Everyone no’s mousepad is another one of are socks Davy.”

    LOL, juanPee, you been dunked and that is all you have?

  12. zero juan on Sat, 11th Jul 2020 10:34 am 

    juanPee garbage:

    35 troops killed in Nigeria jihadist “muzz” ambush, 30 missing: new toll said supertards please love supertard please love supr…

    FMR-19 whitey supertard pastor CHUCK-19 BALDWIN-19 wrote about CONVICT-19 the biggest global said HoAX-19 please wear your face diaper please love s…

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