At the end of July, we wrote an article titled “Oil Bulls Beware: Crude Demand Is About To Slide As China’s SPR Is “Close To Capacity“” which explained why what until recently had been a record hoarding of oil by China, was starting to fade. The reason: according to JPM China’s Strategic Petroleum Reserve was filling up.
As we said then, “as many speculated, a big source of China’s demand in the past 5 months was Beijing’s decision to stockpile oil for its SPR. However, that is now over as China is likely close to filling its strategic petroleum reserves after doubling purchases for it this year as prices plunged. JPM estimates that China’s SPR demand was equivalent to approximately 1mm bpd. More importantly, stopping shipments for the reserve would wipe out about 15 percent of the country’s imports, according to the bank.”
This post was published at Zero Hedge on Aug 31, 2016.