An industry survey showed crude inventories in China rose to a new record of 889.35 million barrels in the week starting July 20 from 874.84 million barrels a month earlier and 766.21 million barrels in the same week last year. The stock build is attributed to record imports and slowing domestic fuel demand. Oil market watchers expect China’s crude imports to slow down in the third quarter as it will likely take time to work through its high inventories.
Chinese refineries went into a buying spree in the late first quarter to snap cheap oil prices amid the coronavirus pandemic. Tanker tracking data indicated that China’s seaborn crude imports averaged 11.09 million bpd in Jule, steady from 11.18 million bpd in June. China’s total crude supplies are expected to increase over 16 million bpd in July, considering a stable domestic output of 3.91 million bpd during the first six months of 2020.
At the same time, heavy rainfalls have caused floods in about 23 provinces that put a cap on China’s refinery throughput. State refiners have cut operating rates in at least 20 of their refineries by 1-17 percentage points from June. Meanwhile, independent refiners have reduced prices by about six percentage points from June due to weaker margins.
