China’s crude oil imports fell to some 9.77 million barrels daily last month, down 2 percent on May and the lowest monthly level since the start of the year, Reuters reported, citing customs data.
Over the first half of the year, China imported 260.66 million tons of crude, down 3 percent on the first half of 2020. The first-half figure was boosted by increased imports by independent refiners, commonly called teapots.
Since the first quarter, however, Beijing has begun cracking down on the teapots, as production of fuels both at independent refiners and state-owned majors was rising faster than demand, undermining refining margins and creating a glut.
Beijing intervened, asking state-owned oil majors to stop trading their crude oil import quotas with private refiners. The government also reduced the second batch of crude oil import quotas for private refiners by as much as 35 percent last month, to a total of 35.24 million tons.
This intervention suggests that imports may remain subdued in the next few months as well, all the more likely because of higher prices. China seems to have enough oil in storage to draw from, according to an earlier report by OilX. The energy analytics firm said that based on satellite data, crude oil in storage in China has fallen from 436 million tons in April to 414 million barrels as of the end of June.
The news about falling imports, however, will have its own effect on prices, likely negative, especially as worry about the latest variant of the coronavirus appears to be rising and weighing on oil prices.
On the flip side, OPEC+ is still trying to reach an agreement on production adjustments, and this is intensifying the price volatility. This volatility could remain heightened until last month, JP Morgan said earlier this week, while the cartel struggles to bring the UAE back in line.
By Irina Slav for Oilprice.com