China oil buying frenzy cools as record inventory shields it from price rally

China oil buying frenzy cools as record inventory shields it from price rally

China, the world's top crude importer, is drawing on record inventories amassed earlier this year as refiners scale back purchases after OPEC+ supply cuts drove global prices above $80 a barrel, traders and analysts said.

Chinese refiners, led by Sinopec and PetroChina, have built a supply buffer using massive storage capacity constructed over the past decade that gave buyers flexibility to boost purchases when prices are low and cut back when oil becomes expensive.

Its ability to draw on vast stocks could undermine efforts by major producers, led by OPEC kingpin Saudi Arabia, to tighten supply and support prices, analysts said.

Tepid Chinese demand could weigh further on oil prices, with benchmark Brent having fallen 4% from a six-month high of $87.55 in early August, weighed down by worries over China's weakening economy.

China's crude stocks have been rising since March, touching a historical high of about 1 billion barrels in late July, data compiled by data analytic firms Kpler and Vortexa showed, driven by lower prices and optimism about a fuel demand recovery after COVID-19 lockdown measures were lifted late last year, traders said.

Kpler and Vortexa data showed there were some draw outs in the first quarter.

Over the first seven months, China's crude