While we continure to hear how bad the Chinese economy is doing, and how they are the leaders in the energy transition, their refiners are going through 20% more crude now than this time last year.
Not to miss an opportunity, they are taking advantage of the huge crack spreads from cheap Russian and Iranian crude, and selling it to the undersupplied global product market. Product inventories are low in the US and Europe, which will support this arbitrage going forward.
With India continuing to ramp up their crude demand as well, this is also driving prices higher.
I had posted about the increasing oil demand here in Asia and the Third world a long time ago, which will more than displace oil demand losses in the Western world. It is indeed happening. This is one more reason why we are seeing $91 WTI today.
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https://oilprice.com/Latest-Energy-News/World-News/Chinas-Refinery-Throughput-Jumps-To-Record-Highs.html China’s Refinery Throughput Jumps To Record Highs
High margins on the export markets and peak domestic summer demand prompted China’s refiners to boost crude oil processing to a record-high 15.23 million barrels per day (bpd) in August, official Chinese data showed on Friday.
The total throughput jumped last month by 19.6% compared to August 2022, according to data from China’s National Bureau of Statistics (NBS) quoted by Reuters. The rise in refinery runs was the highest annual increase since March 2021, Reuters noted.
Between January and August, refinery throughput went up by 11.9% year-over-year to 14.76 million bpd, per Reuters estimates.
The August 2023 refinery processing rates were higher than in the previous month, too. In July, Chinese refiners processed 17.4% more crude compared to a year ago, in response to stronger demand for fuels both at home and abroad. At 14.87 million bpd in July, the refinery processing was up from 12.5 million barrels daily a year earlier.
Refinery throughput further accelerated in August with record runs, thanks to peak summer travel demand in China and higher volumes of fuel exports as refiners looked to capture strong margins abroad and had additional export quotas allocated.
China imported in August the third-highest monthly crude oil volumes ever as crude arrivals surged by 20.9% compared to July and by 30.9% versus August last year, according to Chinese customs data.
Chinese crude imports hit 12.43 million bpd last month, the third-highest ever daily rate of arrivals in a month, per Reuters estimates on data from the General Administration of Customs.
Refinery throughputs are likely to remain elevated as China has just issued the third batch of fuel export quotas for this year.
At the end of August, China issued a larger-than-expected fuel export quota in the third batch of allocations this year as authorities look to incentivize refiners to sustain economic growth and sell more product abroad at a time when China’s 2023 fuel demand may have peaked.
The news of record-high refinery throughput only added to bullish sentiment in oil markets, pushing both WTI and Brent higher.
By Tsvetana Paraskova for Oilprice.com