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Page added on October 1, 2016
China’s Secret Oil Stockpiles Exposed In New Satellite Images
Winter energy prices are likely to rise, but not because of this week’s decision by OPEC. Instead, energy traders say, look to China.
Earlier this week, OPEC—14 nations representing just under half of the world’s oil production—reached a gentlemen’s agreement of sorts to trim crude oil production by 700,000 barrels a day from more than 33 million barrels a day sometime later this year. That announcement briefly nudged oil prices back up toward $50, but prices have eased again on concerns that OPEC, notorious for not sticking to its agreements, won’t stick to this one either.
What’s more likely to keep winter energy prices propped up, energy traders say, is the secretive stockpiling of crude oil by China, the world’s second-largest consumer of oil next to the U.S. New data released on Thursday by geospatial analytics firm Orbital Insight shows that China has been under-reporting its oil stockpile—and continues gobbling up supplies on the global market.
“China seems to be building tanks and filling them fast—and building more tanks just as fast or even faster,” Orbital Insight’s CEO James Crawford tells Newsweek. He notes that satellite images obtained and analyzed by the company confirm China’s oil supply has risen to 600 million barrels as of May 2016 and shows no sign of slowing down.
That’s up from 585.6 million barrels in 2015 and 519.9 million barrels in 2014, Crawford says, citing earlier data from satellite images also analyzed by Orbital. Total supply includes both commercial and strategic barrels, he said. The company’s data does not differentiate between the two, as both types of barrels are often commingled inside the same tanks.
China’s oil imports hit a new record earlier this year, surging above 8 million barrels a day and climbing 16 percent on the year as of June. Notably, its rising imports in the first half of the year overlapped with higher U.S. energy prices headed into the summer. Crude oil prices started out in 2016 below $30 a barrel, with retail gasoline prices in many parts of the U.S. dropping below $2 a gallon. But oil jumped above $50 by June, partly due to petroleum purchases by China, a price point it’s now targeting again.
Orbital also revealed Thursday that its satellite images uncovered oil storage tanks in China previously unknown to international organizations, noting that as of 2014, China had 2,100 commercial and strategic petroleum reserve tanks with a storage capacity of 900 million barrels. That’s four times what industry reports indicated at the time, the company says. While Orbital Insight is still in the process of analyzing storage capacity data for 2015 and 2016, Crawford says so far there’s no indication that China is easing up on building more storage.
“Storage capacity seems to still be rising along with supply,” Crawford said. “It really represents China’s capacity to take advantage of any price swings in the market,” because the more storage it has, the more room it has to buy oil when prices are low.
Given its outsize influence, China’s activity in the market is likely to have greater ramifications than OPEC going forward, although any reduction in the global oil supply would make petroleum products such as gasoline and heating oil scarcer going into winter.
“At the end of the day, the reality of the OPEC cut is that it may not mean much, because OPEC members often don’t comply,” a bank trader told Newsweek, asking not to be named because it is the policy of his firm, one of the world’s top physical buyers of oil. “And if that happens, that will leave the onus on Chinese demand over OPEC.”
Oil prices leapt as much as $3 a barrel following OPEC’s announcement of its agreement, but edged back to hover at $45 a barrel Friday, as details of OPEC’s plan won’t be cemented until its next meeting November 30. And even then, nothing is guaranteed, experts say, because none of OPEC’s members have to follow any agreement they hammer out. (That’s why calling OPEC a “cartel” is a misnomer: Obedience is not mandatory.)
Meanwhile, China’s role as a major oil buyer could keep prices firm going into 2017, the trader says. He expects China likely will be very selective about when it dips into the market. “They’re very market-savvy, so they’re not going to buy above $50,” he says. “They’re targeting the low- to mid-$40s.” That means prices may have trouble falling below the mid-$40s and staying there as long as China is buying.
Orbital Insight calculated China’s unreported oil supplies and oil storage capacity by analyzing high-resolution satellite images of the country’s storage facilities. The company uses algorithms to quantify oil supply and oil capacity by monitoring the changing shadows cast by the floating roofs of the storage tanks, which rise as supply increases and fall as supply decreases. Crawford says the company tracks oil supplies not just in China, but around the world, and has back-tested the results of its readings against historic satellite and oil data to confirm their accuracy.
Orbital’s statistics on China are particularly useful, because they’re based on independent and unbiased measurements from satellite images collected two to three times a month, whereas the country is not always truthful about its economic data. And even third-party surveys are often guesstimates.
A startup based in Palo Alto, California, Orbital launched in late 2013 and has been selling its data primarily to Wall Street clients that use its satellite-based monitoring tools to place million-dollar bets on the market. In fact, Crawford says, the financial sector represents the company’s dominant revenue stream. “We’re always telling our clients, ‘Tell people about us!’” he says. “And they say, ‘We love you guys, but you know we can’t do that.’” Orbital also works with the World Bank and a number of U.S. government agencies Crawford won’t name. The company works with more than 70 asset-management firms.
Thursday marked the launch of the company’s China Oil data service, which builds on its U.S. oil market data, as well as other monitoring tools that use satellite imagery, algorithms and large-scale analysis to track everything from global crop yields to poverty rates to nearly 100 U.S. retail chains, such as Wal-Mart and Macy’s. The company analyzes retail parking lot counts, freshwater reserves and global trade.
“By the middle of next year,” Crawford says, “Our oil data will not just cover the U.S. and China, but the whole world.”
12 Comments on "China’s Secret Oil Stockpiles Exposed In New Satellite Images"
rockman on Sat, 1st Oct 2016 9:38 pm
“China’s oil supply has risen to 600 million barrels as of May 2016…Total supply includes both commercial and strategic barrels…data does not differentiate between the two, as both types of barrels are often commingled inside the same tanks.”
And according to the EIA by the US has 2.1 BILLION bbls compared to China’s 600 MILLION bbls. But shh…don’t tell anyone…it’s also a secret. LOL.
Apneaman on Sat, 1st Oct 2016 9:55 pm
In Canada we store our oil in sand. Saves on having to pay all those primadonna union Boilermakers to build more tank farms.
makati1 on Sat, 1st Oct 2016 10:42 pm
Does China know something the sheeple don’t know?
“Peace was at hand. And then the neoconservatives, rehabilitated by the Israeli influence in the American press, went to work to destroy the peace that Reagan and Gorbachev had achieved. It was a short-lasting peace. Peace is costly to the profits of the military/security complex. Washington’s gigantic military and security interests are far more powerful than the peace lobby.
Since the advent of the criminal Clinton regime, every American president has worked overtime to raise tensions with Russia and China.”
http://www.zerohedge.com/news/2016-10-01/paul-craig-roberts-urges-bring-back-cold-war
If you don’t think that nuclear war can or will ever happen, you are deluding yourself. We are closer now than ever since 1945.
“China is confronted with the crazed and criminal Obama regime’s declaration of the “pivot to Asia” and the prospect of the US Navy controlling the sea lanes that provision China.
Russia is even more dangerously threatened with US nuclear missile bases on her border and with US and NATO military bases stretching from the Baltics to the Black Sea.”
Billions of barrels of oil are a nice backup if you expect war.
denial on Sat, 1st Oct 2016 10:46 pm
why is this story being run twice on here in the same week? Yeah I am suspicious…..something is up
Anonymous on Sat, 1st Oct 2016 11:14 pm
China’s oil reserves were a ‘secret’? What part? The fact that they have one, or……what..exactly?
I know this idiotic story is designed to frighten amerikans, but…why again is any of his even a concern? Or is it a just a slow newsweek.
Get it? Slow newsweek….
“Orbital’s statistics on China are particularly useful, because they’re based on independent and unbiased measurements from satellite images collected two to three times a month, whereas the country is not always truthful about its economic data. And even third-party surveys are often guesstimates.”
RoFL, hey amerika has the exact same policy when it comes to economic data as China does. uS economic data is seldom truthful either. Maybe China should point one its satellites at the parking lots of amerikas Wall-Marts to find out how well the amerikan economy is actually doing.
makati1 on Mon, 3rd Oct 2016 6:31 pm
World War 3 is one step closer if these articles are correct:
“The Kremlin have announced that China are to send 5,000 of its most elite military forces into the Levant War Zone to help Russia in the fight against ISIS, which has left the Obama administration and the Pentagon “horrified”.”
http://endingthefed.com/pentagon-stunned-as-thousands-of-chinese-troops-enter-isis-war.html
http://www.whatdoesitmean.com/index1970.htm
http://www.lrb.co.uk/v38/n01/seymour-m-hersh/military-to-military
Are the Chinese actually in Syria, or…? Note the dates of the articles. Has this been ignored by the US MSM Iron Curtain? A good reason to stockpile oil? We shall see.
makati1 on Tue, 4th Oct 2016 12:53 am
And then there is this:
“As relations between Russia and the US disintegrate as a result of the escalating proxy war in Syria, which today culminated with Putin halting a Plutonium cleanup effort with the US, shortly before the US State Department announced it would end negotiations with Russia over Syria, tomorrow an unprecedented 40 million Russian citizens, as well as 200,000 specialists from “emergency rescue divisions” and 50,000 units of equipment are set to take part in a four day-long civil defense, emergency evacuation and disaster preparedness drill, the Russian Ministry for Civil Defense reported on its website.”
http://www.zerohedge.com/news/2016-10-03/40-million-russians-take-part-radiation-disaster-drill-days-after-us-general-warns-w
Can you see 40 million Americans taking part in a drill like this? Hell No! Not even 40,000. LOL
Interesting, NO?
GregT on Tue, 4th Oct 2016 1:15 am
From your linked article mak, and worth paying attention to, especially for US Americans:
“During testimony before the Senate Committee on Armed Services last week General Joseph Dunford rang the alarm over a policy shift that is gaining more traction within the halls of Washington following the collapse of the ceasefire brokered by the United States and Russia in Syria saying that it could result in a major international war which he was not prepared to advocate on behalf of. Senator Roger Wicker of Mississippi asked about Hillary Clinton’s proposal for a no fly zone in Syria in response to allegations that Russia and Syria have intensified their aerial bombardment of rebel-held East Aleppo since the collapse of the ceasefire.”
“What about the option of controlling the airspace so that barrel bombs cannot be dropped? What do you think of that option?” asked Wicker. “Right now, Senator, for us to control all of the airspace in Syria would require us to go to war against Syria and Russia. That is a pretty fundamental decision that certainly I’m not going to make,” said the Chairman of the Joint Chiefs of Staff suggesting the policy was too hawkish even for military leaders.
https://www.youtube.com/watch?v=fmE9Jj-rEVs
If Hillary manages to get into the White House, the next world war will not be fought overseas, it will be fought right here in North America.
makati1 on Tue, 4th Oct 2016 1:32 am
GregT, I think you are correct and I think it will be over in an hour, with most of America destroyed. Russia? If you take out the major cities, there is still a lot of Russia left. Twice the length of the US and almost twice the land area. And, if the other info I have read recently is true, the Russians may be able take out most of the missiles the US fire-off before they even get to Russia. The US has no such capability to protect the 50 states. I really don’t want to find out, but…
GregT on Tue, 4th Oct 2016 1:59 am
The way I see it mak,
The unfolding political circus sideshow will determine whether the empire goes out with a whimper, or with a bang. My bet is on more of the same. Kicking and screaming.
GregT on Tue, 4th Oct 2016 2:01 am
Big bada boom!
makati1 on Tue, 4th Oct 2016 2:16 am
GregT, I hope, for my family’s sake that you are correct.
Hahaha. I can picture him saying that. Great movie. I have it on DVD. ^_^