Perhaps the glut of oil peaked in the world’s largest oil importer .
Oil stocks in China have shrunk in recent weeks, after rising to record levels, according to analysts and satellite watchers . Supply moved out of stock in conjunction with the refining plants increasing their operations to meet the growing demand from the economy just returning to work after the closure .
The return of the equilibrium of the oil stores in the largest country to import the commodity in the world indicates that the world market may have restored itself after the violent collapse, according to Morgan Stanley (NYSE:MS). Inventories are declining despite an increase in imports in April compared to previous months, according to customs data .
“It can be said that there is strong refining activity if we combine the falling stocks and the rise in imports, ” Jeffrey Craig, Orsa Space Systems analyst, told Bloomberg . ” I saw those stores rise strongly at the end of February, and in March, and since then they have stabilized, and the limited decline has begun .”
According to Bloomberg, refineries are pulling oil from stores to process to petrol and diesel to meet demand for transportation that has just returned in Chinese cities after the closure early this year . With the decline in demand for fuel for cars and oil from all over the world, the peak hours from Beijing to Shenzhen reached the highest level in the same period last year .
Some refineries operate from Shandong in northeast China, with a record operating strength . The state-owned company, PetroChina, is rushing to raise production after the first quarter drop .
” The trend in April was a net drawdown, with more refining demand and profitable margins increasing, ” says Yao Li, chief executive of consulting firm Sia Energy . Sia Energy estimates stocks to drop by 9.5 million barrels in April, after increasing by 161 million barrels in the first quarter .
China imported 9.9 million barrels per day in April, up 1.7% from March, but 10.2 million barrels per day less than last year’s average, the highest import rate in the world . Chinese imports of oil and refining products are likely to rise in May, further depressing inventory, according to the China Ports Association in a statement last week .
Unlike the United States, which publishes weekly oil inventory profiles, China rarely publishes such data to leave analysts at a loss with complicated combinations of stock levels estimates or the resort to satellite observation, and is now trying to estimate the country’s floating stock .
Ursa and Orbital Insight companies use different technologies, but both have monitored the recent downturn . According to data from the two companies, Orsa believes that the record level was at the end of March, while Orbital reached the stock in its view to the peak in mid-April, and continued the decline since then .