China’s stockpile of oil helps to bolster prices
Evidence is mounting that China is buying more oil than it consumes, raising fears that oil hoarding may be supporting the current high price of crude.
The signs of aggressive Chinese stockpiling emerge from research by Merrill Lynch, the investment bank, which suggests that China is importing crude and refined products at twice the rate of growth in actual demand.
Rampant economic growth in the People’s Republic over the past two years has enabled China to overtake Japan this year as the world’s secondlargest oil consumer, burning some 6.3 million barrels a day.
Projections of the rate of growth in consumption in the People’s Republic suggest that China’s power generators, road hauliers, petrochemical plants and factories will burn an extra 500,000 barrels a day of crude oil this year. But Merrill Lynch’s analysis of implied demand, based on import data in the first and second quarter of this year, suggests that demand will increase this year by one million barrels a day.
Michael Rothman, Merrill Lynch’s senior energy analyst in New York, reckons that the second figure is not real consumption and does not reflect actual burning of crude in Chinese cars and power plants.
“It appears to be a hoarding phenomenon and we think it has to run its course, and when it does pass, prices should gravitate much lower, somewhere down towards $30 per barrel. “
The article doesn’t speculate as to why they might be stockpiling. I can think of a number of reasons, some innocent, some not.
One Comment
Clever, those orientals, like the Japaese, who bought most of New York just before the real estate crash. Oil is now down 15% from it’s recent high.