China’s crude oil inventories is estimated to increase by 440 million barrels over the first six months of 2020. This “big fill” dwarfs the largest-ever six-month increase in US crude stocks to date, which was during late 2014 and early 2015 when stocks increased by 111 million barrels. That’s just 25% the size of the inventory build currently under way in China, according to IHS Markit.
“The world has never seen an increase of this magnitude in such a short period of time,” Jim Burkhard, Vice President and Head of Oil Markets, IHS Markit, said. “Crude oil in storage has increased around the world as demand has fallen this year. But no geography – not even floating storage – matches the scale of China’s inventory increase.”
The peak of China’s stock build, on a daily average basis, was 4.8 million bbl/day in February, when Chinese oil demand was at a low point. “China’s crude oil buying and stock building have been a critical support for an otherwise exceptionally weak crude oil market,” Xiaonan Feng, Research Analyst, IHS Markit, said. “It is part of the reason for the increase in crude oil prices that have occurred since late April.”