"This is a golden time window to acquire more strategic oil at lower costs," notes one Hong-Kong based analyst, as Bloomberg confirms what we have noted here and here, that China is emerging as the winner from OPEC’s battle with rival oil producers as the world’s biggest energy consumer stockpiles crude.
84 tankers remain en route to Chinese destinations...
The dwindling number of investors still betting on a rebound in prices can at least count on Chinese demand. OPEC decided to maintain output targets even as a shale boom boosts U.S. production to the highest in more than three decades and causes a global supply glut. As crude extends its slump to the lowest level in more than four years, China is seeking to build a strategic petroleum reserve.
“This is a golden time window to acquire more strategic oil stockpiles at lower costs,” Gordon Kwan, the Hong Kong-based head of regional oil and gas research at Nomura Holdings Inc., wrote in an e-mail Nov. 28. China will be “a big beneficiary” from the OPEC decision, he said.
The nation’s efforts to boost reserves may increase its imports by as much as 700,000 barrels a day in 2015, according to London-based Energy Aspects Ltd. That’s more than half the global glut forecast by Citigroup Inc. after the Organization of Petroleum Exporting Countries refrained from cutting output at its meeting last week.
China boosted imports by 8.3 percent, or 460,000 barrels a day, in the first nine months of this year, the fastest pace since 2010, customs data show. The country will overtake the U.S. as the world’s biggest oil consumer within two decades, according to the International Energy Agency in Paris.
While China currently holds reserves equivalent to about 30 days of imports, the government is seeking to boost that level to 100 days by 2020, according to China Petrochemical Corp., Asia’s biggest refiner. That would be the equivalent of about 570 million barrels, based on the most recent monthly imports.
“We know that China has already been taking advantage of lower prices to fill the SPR,” Simon Powell, the head of Asian oil and gas research at CLSA Ltd. in Hong Kong, wrote in an e-mail Nov. 28. “They still have a long way to go.”
The world’s second-biggest economy consumed the largest volume of oil on record in October, according to data compiled by Bloomberg.
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As we concluded previously, just like Chinese gold imports rise when the price of gold drops; so China does the logical thing with other commodities, (i.e. oil) when prices tumble and instead of selling into the paper rout, it buys all the physical it can get its hands on.