China’s Oil Hoarding Clouds Outlook for Slowing Demand Growth
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China’s robust stockpiling of crude is expected to continue next year, helping to cushion global markets from a swelling surplus, but masking a broader trend of slowing oil demand growth.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — China’s robust stockpiling of crude is expected to continue next year, helping to cushion global markets from a swelling surplus, but masking a broader trend of slowing oil demand growth.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.Buying for commercial and strategic petroleum reserves propped up global oil prices in 2025, as the market grappled with the rapid return of idled output from OPEC+ and rising supply from other producers. Underpinned in part by energy security needs, Chinese stockpiling is expected to expand further next year, according to forecasts from Citigroup Inc. and FGE NexantECA.China’s SPR is a tightly held state secret, and absolute levels and the pace of crude buying can be difficult to gauge, but third-party providers often run the numbers to provide some insight. Energy Aspects estimates the nation’s overall storage capacity — including commercial — is around 2 billion barrels, and is expected to expand by nearly 260 million barrels next year.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.“Actual imports could be much higher than our forecasts,” especially in the latter half of next year, if Beijing issues a fresh mandate to fill storage, said Jianan Sun, an analyst with Energy Aspects. The group currently expects inbound shipments of about 11.4 million barrels a day, roughly flat year-on-year.Under a previous directive, China plans to buy as much as 140 million barrels for its SPR for delivery between October and March, as long as prices hold below $80 a barrel. Global benchmark Brent was briefly near that level in June, but is now trading around $62 due to concerns about the glut.Citigroup forecasts China’s stockpiling could continue at a rate of about 900,000 barrels a day next year, up from daily average builds since March of around 800,000 barrels. FGE predicts the country may add 600,000 barrels a day, compared with 480,000 barrels a day in 2025.The country’s network of coastal tanks and caverns are currently around half full, according to analytics firm OilX, providing plenty of room for additional barrels, especially with oil prices facing downward pressure into 2026.‘Irreversible Path’China’s buying for stockpiles has captured market attention, but it’s distracted from the nation’s continuing trend of slowing oil demand growth due to well-documented factors, such as the uptake of electric vehicles. Beijing is also seeking to consolidate its refining industry, partly due to green goals.That consolidation means a huge refining and petrochemical venture between Saudi Aramco and its Chinese partners in Liaoning province will likely fill the void of some trimmed capacity, rather than significantly boost consumption. The complex is expected to be operational next year, according to JLC.The nation’s oil demand growth started to weaken in 2024 following a surge the previous year after Covid lockdowns were lifted, according to the International Energy Agency. The rate rose by 0.8% in 2024, well below the annual average prior to the pandemic, the IEA said.China’s oil demand growth is forecast to be 150,000 barrels a day next year, according to the median estimate in a Bloomberg survey of analysts. Energy Aspects was the most bullish, expecting daily growth at 320,000 barrels, mainly on rising petrochemical demand. Still, the prediction is a year-on-year drop.“It’s an irreversible path,” said Ye Lin, vice president of oil markets at consultancy Rystad Energy, which also forecasts demand growth falling in 2026. “The market is now feeling the impact of China’s fast-growing EV fleet.”On the WireChile’s bustling cherry industry has flourished from a niche crop into a multi billion-dollar export sensation, generating more revenue for the country last year than its coveted battery metal lithium. Most shipments go to China.China and Japan’s diplomatic spat shows no sign of an offramp even as the leadership of a Japanese political party that helped break the ice in a previous dispute continues to talk with officials from Beijing behind the scenes.Chinese artificial intelligence startup DeepSeek has relied on Nvidia Corp. chips that are banned in the country to develop an upcoming AI model, according to a new report in The Information.This Week’s Diary(All times Beijing)Thursday, Dec. 11:Friday, Dec. 12:—With assistance from Yongchang Chin.Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.