Just what my shorts want to hear
China is buying more than 600,000 barrels of crude a day above what they need as they stockpile oil for emergency use report Bloomberg
As part of a plan that began in 2000 they have want to have 100 days of supplies and have been constructing storage in various locations to store the oil. While official records of stock levels are hard to come by the China National Petroleum corp estimated that they held around 141m barrels at the end of 2013.
The next stage of the plan will see seven sites constructed to hold 191m barrels. By 2020 they are expected to have around 680m barrels in storage and the 100 day stock level complete. For comparison the US has around 691m barrels in reserve which equates to about 37 days of consumption.
The buying is adding a further bid tone to Brent prices which have also been elevated on the Iraq and Syria conflicts and is estimated to cost China around an extra $66m per day at current prices.
China is the worlds second largest importer of oil.
At the moment there’s many factors lining up that make oil longs the ideal choice but some caution is warranted before looking to trade on this news. One of the reasons for the stockpiling is to guard against big price spikes and so any further large moves in prices over the Middle East situation may have them scaling down their buying and dipping into reserves.
