China is increasing imports of US crude oil ahead of the highly-anticipated review of the phase-one trade deal between the world’s two most powerful economies. Provisional tanker booking data indicated about 14 million barrels of American oil is scheduled to be loaded in September for delivery to China. If realized, China’s imports of US crude would be more than double the volumes set for this month.
China pledged to boost purchases of US energy products under the phase-one trade deal which will initially be reviewed last weekend. However, the talks were delayed indefinitely amid rising tensions between both nations. In the first half of 2020, China met only 23% of its purchase commitment under the trade agreement for this year.
Chinese refineries have been ramping up throughput as the economy emerges from the coronavirus lockdown, which may explain the recent surge in their US crude imports. However, some analysts said that the increase in American oil purchases was likely politically driven, considering high inventories and higher US crude prices compared to their Middle Eastern rivals.
As of August 17, Sinopec and PetroChina chartered more than 40% of the supertankers which are bound to China for September loading. Trading sources said Chinese importers mostly bought grades such as WTI Midland and Mars although their prices weren’t always lower than similar grades from other suppliers.
According to customs data, China imported an average of 568,500 tons (4.2 million barrels) of American crude a month in May and June. The world’s largest oil importer purchased no US crude in the previous five months amid deteriorating relations between the two countries over the COVID-19 pandemic.
