• Oil demand in China is rebounding, but it may be softer than what headline figures suggest.
  • Last month, China imported a record-high 11.34 million bpd of crude oil.
  • Because of China’s opaque – or merely non-existent – reporting on storage availability and inventories, no one knows how much longer China could keep up its record filling rates if it chose to do so.
China’s crude oil imports jumped to a record high in May, while refinery throughput increased to near-peak levels, suggesting a strong recovery in oil demand after the coronavirus outbreak.

Indeed, recovery is there, but it is not the sole reason why China – through relatively strong crude oil imports even during the lockdown – helped the otherwise weak global oil demand when other countries went on lockdown in March and April.

Oil demand in China is rebounding, but it may be softer than what headline figures suggest because China stepped up its crude oil stockpiling this year and boosted exports of refined oil products, Reuters columnist Clyde Russell notes.

Regardless of the reasons for China’s seemingly insatiable appetite for crude oil, one question looms over the market—how long will China keep up oil imports that generally support global oil demand recovery, which is still fragile elsewhere.

Last month, China imported a record-high 11.34 million bpd of crude oil. While part of the record imports was driven by economic activity picking up, the other driver was April’s meager oil prices, which incentivized China’s crude oil stockpiling in strategic and commercial inventories.

According to calculations by Reuters’ columnist Russell, China hoarded crude oil at a rate of 1.88 million bpd between January and May, up by around 670,000 bpd from the 2019 estimated fill rate of 1.21 million bpd.

Since China does not report inventories, analysts are trying to guesstimate how much crude it is directing to storage based on data of imports plus domestic production, minus refinery throughputs.