China’s crude oil imports

China’s General Administration of Customs reported that China’s crude oil imports rose to 8.61 MMbpd (million barrels per day) in December 2016. Imports rose 9% month-over-month and 13% year-over-year. China’s crude oil imports rose due to the rise in demand from its teapot refineries. The rise in crude oil imports from China supports crude oil (ERX) (PXI) (BNO) (USL) (RYE) prices. China is the second-largest crude oil consumer after the US.

China’s crude oil imports averaged 7.6 MMbpd in 2016—13.2% higher than 2015.

Will China’s Crude Oil Imports and Demand Support Oil Prices?

China’s crude oil imports and demand 

  • China’s crude imports will increase 5.3% to 8 MMbpd in 2017, according to China National Petroleum Corp. It also added that China’s crude oil consumption will rise 3.4% to 12 MMbpd in 2017.
  • Slowing Chinese crude oil production due to aging 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. It could also add to imports.
  • Demand from teapot refineries could support oil imports in 2017.
  • China’s fuel exports hit a record high at 5.5 million tons in December 2016. The rise in Chinese fuel exports will put pressure on refined product margins. To learn more, read How Lower Refinery Margins Impact Crude Oil Prices.

Impact on crude oil, energy stocks, and ETFs 

Higher crude oil imports and demand from China could benefit crude oil (FENY) (SCO) (RYE) (BNO) prices. High crude oil prices could have a positive impact on producers’ margins like Goodrich Petroleum (GDP), Chevron (CVX), Bill Barrett (BBG), ExxonMobil (XOM), and Whiting Petroleum (WLL). However, China is exporting refined products. Glut in the refined products market could pressure crude oil prices. The slowing Chinese economy might pressure crude oil prices.

In the next part of this series, we’ll analyze how major oil producers impact crude oil prices.

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