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China’s Crude Imports Surpass US Crude Imports in September

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China’s crude oil imports  

In this part of the series, we’ll look at China’s crude oil imports and demand.

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China’s crude oil imports and demand 

  • China’s General Administration of Customs reported that China’s crude oil imports rose to 8,040,000 bpd (barrels per day) in September 2016. Imports rose 4.4% month-over-month and 18% year-over-year. China’s crude oil imports rose due to the rise in demand from its flourishing teapot refineries. China’s crude oil imports surpassed US crude oil imports for the third time in the last 12 months. The four-week average US crude oil imports were at 7,980,000 barrels per day in September 2016.
  • China’s refined products exports rose to 4.3 million tons in September 2016. Exports rose 21.1% year-over-year.
  • A Platts survey suggests that China’s crude imports in 2016 will average 7.4 MMbpd (million barrels per day), 10% higher than the 6.7 MMbpd in 2015 due to demand from its teapot refineries.
  • Slowing Chinese crude oil production due to aging oilfields and lower crude oil prices could also increase China’s crude oil imports.
  • The EIA estimates that China is planning to build 500 million barrels of strategic crude oil reserve space by 2020. This could also add to imports.
  • Platts reports show that China has increased its strategic crude oil reserve to 234.3 million barrels as of early 2016 from 191.3 million barrels in mid-2015.

Impact on crude oil, energy stocks, and ETFs  

Higher crude oil imports from China could benefit crude oil prices. However, the rise in Chinese fuel exports could put pressure on refined product prices. To learn more, read How Lower Refinery Margins Impact Crude Oil Prices.

Volatility in crude oil prices could impact the earnings of producers like Goodrich Petroleum (GDP), Bill Barrett (BBG), and Whiting Petroleum (WLL).

Volatility also impacts ETFs and ETNs like the VelocityShares 3X Inverse Crude Oil ETN (DWTI), the iShares Global Energy ETF (IXC), the iShares U.S. Energy ETF (IYE), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the Fidelity MSCI Energy (FENY), the ProShares Ultra Oil & Gas (DIG), and the Vanguard Energy ETF (VDE).

In the next part of this series, we’ll look at how gasoline demand impacts crude oil prices.

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