LAUNCESTON, Australia – China’s refineries processed more crude than ever before in March, but despite this record the world’s largest oil importer still boosted inventories.
China’s refinery throughput hit an all-time high of 63.9 million tons in March, equivalent to about 15.11 million barrels per day (bpd), up from 14.36 million bpd in the first two months of the year.
However, the amount of crude available to refiners from imports and domestic output also rose in March, reaching 16.67 million bpd, according to calculations based on official data.
China doesn’t disclose the volumes of crude flowing into or out of strategic and commercial stockpiles, but an estimate can be made by deducting the amount of crude processed from the total of crude available from imports and domestic output.
Crude imports in March were 12.37 million bpd, while domestic output was 4.30 million bpd, giving a combined total of 16.67 million bpd.
Subtracting the refinery throughput leaves 1.56 million bpd that likely flowed into either commercial or strategic inventories.
This was an increase in the amount available for stockpiles from the first two months of the year, when the surplus was 270,000 bpd.
For the first quarter as a whole, China added about 770,000 bpd to inventories, slightly more than the 740,000 bpd average for all of 2022.
The question for the oil market is what does it all mean for the outlook for crude oil demand in China?
Much of the optimism over forecasts for strong growth in global oil demand this year are centred around a rebound in China, especially in the second half of the year as the world’s second-largest economy is expected to experience strong growth after ending its strict zero-COVID policy.
There is nothing inherently wrong with OPEC+’s forecast for global oil demand growth of 2.32 million bpd in 2023, or the 2 million bpd forecast from the International Energy Agency.
