China Dips into Crude Stockpile as Refinery Runs Rise

China drew on its massive crude oil stockpile in August for the third month in four as refinery processing outpaced imports and domestic production, according to official data. Refineries processed about 640,000 barrels per day (bpd) more than what was available from imports and domestic output, highlighting a significant gap between supply and demand.

China's crude imports plummeted to their lowest level in a decade following the disruption of supplies from the Middle East after the US and Israel attacked Iran on February 28. The country trimmed refinery run rates to meet domestic demand but not high enough to support exports, which also dropped sharply.

The data shows that China tapped its inventories by about 500,000 bpd in May and 940,000 bpd in June, before a surplus of 210,000 bpd was seen in July as imports ticked up slightly. However, the recent draws on China's crude inventories haven't been enough to outweigh builds seen in the early part of the year.

China has absorbed the bulk of the loss from the Middle East by cutting seaborne oil imports by as much as 4 million bpd from pre-war levels. But whether this will continue is one of the main issues facing the oil market, with China's onshore crude inventories in storage tanks declining at a faster pace.