China's high crude Oil imports are also flowing into stockpiling - Commerzbank

China's crude Oil imports were again strong in June: according to customs authorities, 49.9 million tons were imported, 7% more than in the previous month, Commerzbank's commodity analyst Barbara Lambrecht notes.

Build-up of stocks in China may slow down at any time

"This corresponds to daily crude Oil imports of just under 12.2 million barrels. The (daily) imports were thus slightly higher than in March and the highest since summer 2023. The high imports are in line with the strong crude Oil processing reported this morning in China, which climbed to 15.2 million barrels per day, the highest level since September. Margins are currently high, especially in the diesel market, making high processing (and exports) attractive at present."

"Nevertheless, given the rather weak domestic demand (partly structural, partly cyclical), which was confirmed by Q2 GDP data this morning (see here), a certain overshoot in crude Oil imports can be observed. In its latest monthly report, the IEA refers to estimates that crude Oil stocks in China rose by 82 million barrels in the second quarter, or just under 900,000 barrels per day. This is one of the largest increases in inventories ever recorded in a single quarter."

"China wants to improve its energy security and, since January 1, 2025, has also required companies to maintain strategic reserves. The background to this is that statestorage facilities are already 80% full, while commercial storage facilities are only 50% full. However, the sharp increase also poses a risk: the build-up of stocks in China, which is an important support for the Oil market, could slow down at any time."