Published on : Aug 10, 2015
As the global oversupply overpowers the buying opportunities for world’s second-biggest user, most of the record oil imports by China are likely to hamper and fail in the effort to boost oil prices.
Hong Kong’s crude purchases increased nearly 30% to the highest monthly level in July. This jump was the highest on record for demand from filling planned petroleum reserves.
In the meantime, the net exports of various products such as diesel also increased to a 9 month high. This only showed deteriorating of consumer demand. Simultaneously, Brent crude dropped 0.8% to $48.24 a barrel on Monday. This extension was 16% slide for 2015.
According to an interview to the Bloomberg TV by Mark Pervan, the market which has the lowest conditions has the highest opportunities. The foreign purchases increased to 30.71 million metric tons in July, stated Beijing-based General Administration of Customs.
In the first half of 2015, the global oil market witnessed about 2 million barrel per day of oversupply mainly driven by a high surge in production from Iraq, Russia, and Saudi Arabia.
Around 49 million barrels of imports were accounted in the first half of 2015 in the effort to fill the emergency inventories. The government stockpiles will draw an extra 100 million tons for the next four years.
Most of the increase in crude oil imports is propelled by Chinese strategic stockpiling to abuse decade floating low-prices, said head of regional oil and gas research at Hong Kong’s Nomura Holdings.
At the same time, the processing rates which have not been released yet are likely to change putting pressure on refining margins and fueling the growth of oil product exports.
The exports will soar due to the modest domestic demand and growing refinery runs. This will exert strong downward pressure on Asian refinery margins. India is in the game too filling its reserves to a smaller extent. Growth in China’s diesel usage represents 40 percent of domestic fuel demand, particularly among the steel and cement producers.