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Market Chatter: China Crude Imports Fall to 2016 Low, Opening Supply for Asia

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China's crude imports dropped to about 6.6 million barrels per day in May, helping ease Asia's supply strain as Gulf disruptions continued, The Wall Street Journal said in a Tuesday analysis.

Lower Chinese demand freed up additional oil cargoes for Asian refiners, helping the region avoid a sharper supply crunch while tensions around the Strait of Hormuz disrupted shipments.

Kpler's Michelle Brouhard said Chinese buyers sharply slowed their purchases, which allowed the wider Asian oil market to stabilize and increase available supply.

Countries including India, Japan and South Korea still depend heavily on Middle East crude, with Asia sourcing nearly 60% of imported oil from the region last year, the analysis showed.

Kpler data showed weaker refinery operations and softer fuel exports pushed China's crude imports down to their lowest level since 2016, reducing purchases from Russia, Africa and the Americas.

Higher crude prices encouraged Chinese refiners to draw on existing stockpiles rather than import additional barrels, the analysis cited Brouhard saying.

Asian countries, excluding China, are tracking a record US crude imports of 1.94 million barrels per day in May, while African crude imports climbed close to 1.7 mmb/d, Kpler data showed.

Additional crude supply supported refinery activity across Asia, with Kpler projecting refinery runs will climb about 900,000 b/d from April to almost 14.8 mmb/d this month.

Kpler said regional refinery activity still trails year-earlier levels by 1.3 mmb/d, and ongoing Strait of Hormuz disruptions may continue limiting fuel production into the third quarter.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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