China's October Crude Imports to Top 10 Million Barrels a Day as Stockpile Use May Ease

China's crude oil imports in October are set to exceed 10 million barrels a day, raising the possibility that the country could halt its recent use of stockpiles as cargoes booked when oil prices were lower begin to arrive.

Reuters reported on October 22 that commodity analytics firm Kpler estimated China's seaborne crude imports this month at 9.02 million barrels a day. Adding about 1 million barrels a day supplied by pipeline from Russia and Central Asia would bring the total to the highest level since March. The seaborne estimate could rise further if additional cargoes are confirmed before the end of the month.

The increase in purchases was influenced by lower oil prices at the time the contracts were signed. Brent crude fell below $80 a barrel in early August, when Chinese refiners were securing cargoes for October delivery. A recovery in exports through the Strait of Hormuz by producers including Saudi Arabia and the United Arab Emirates also helped restore supply, Kpler said.

China is estimated to have drawn on crude stockpiles four times in the past five months through September. In September, imports and domestic production were 9.03 million barrels a day and 4.43 million barrels a day, respectively. That combined 13.46 million barrels a day was 530,000 barrels below refinery throughput, suggesting the shortfall was covered by inventories. Because the Chinese government does not disclose stockpile releases or additions, Reuters inferred inventory changes by comparing supply with refinery processing.

October has shown signs of inventory growth. According to EA Crude Oil Inventories, China's onshore crude stocks rose by 3 million barrels in the week through October 19 to 1.192 billion barrels. That was a second straight weekly increase, though inventories remained about 13 million barrels below the level seen at the same time last year.

On a year-to-date basis, supply has also exceeded refinery throughput. From January through September, imports plus domestic output averaged 13.97 million barrels a day, while refinery processing averaged 13.73 million barrels a day. Cargoes secured before the war are believed to have offset the subsequent decline in imports.

Reuters said this month's increase in imports could allow China to stop drawing on stockpiles even if refinery activity recovers. Still, the news agency said the recovery in supplies remains uncertain because of the ongoing conflict surrounding the Strait of Hormuz.