CHINA — China’s crude oil processing increased for a second straight month in August, with stronger fuel exports encouraging refineries to increase operations after Beijing relaxed export restrictions.
Chinese refineries processed 59.07 million metric tons of crude in August, equivalent to 13.91 million barrels per day, according to data released Tuesday by the National Bureau of Statistics.
The figure represented an 11.2% increase from July, but processing remained 6.9% lower than in August a year earlier.
The recovery came after high oil prices and limits on refined-fuel exports had pushed Chinese refinery activity in June to levels last seen during the COVID-19 period. Beijing eased the export restrictions in mid-July, giving fuel shipments a larger role in supporting refinery operations.
Exports are expected to remain an important influence on Chinese crude processing in the months ahead. Emma Li, an analyst at Vortexa, said exports are supporting refinery activity, while elevated oil prices are expected to keep weighing on domestic consumption.
China also increased its domestic crude production in August. Output climbed 0.8% from a year earlier to 18.43 million metric tons, or 4.34 million barrels per day.
Calculations based on official crude-import and production data, less refinery throughput, show that China reduced its crude inventories by 639,000 barrels per day in August. It was the second-largest monthly draw since the Iran war began, following a draw of 936,000 barrels per day in June.
Analysts said China has sufficient crude inventories to help safeguard domestic supplies if imports are disrupted. But Beijing could alter its fuel-export policy if tensions across the Middle East intensify.
Vortexa expects seaborne crude arrivals to continue recovering in September and October, potentially reaching about 8 million barrels per day provided there are no additional disruptions.
The outlook for November and December is more uncertain. Vortexa said Chinese refiners hold significant onshore crude inventories that could provide a buffer against interruptions to seaborne supplies.
State-owned refiners are continuing to buy crude, however, as export margins remain strong. Vortexa said drawing on inventories to support domestic supplies is manageable, but using them to maintain elevated exports would not be sustainable over the longer term.
Attacks on Saudi Arabia’s East-West pipeline, along with the possibility of further disruption near the Strait of Hormuz, have increased the prospect that China could restore restrictions on refined-fuel exports after October.
During the first eight months of the year, China processed 456.12 million metric tons of crude, equal to 13.7 million barrels per day and 6.6% below the corresponding period a year earlier.
Original article
Comments