China Accelerates Filling Up Its Oil Reserves

As the U.S. seeks to stockpile oil, China has been doing the same, observers say, and is expected to quicken the pace — a development that already may be helping to boost oil prices.

On Friday, the U.S. Department of Energy said that amid low oil prices, it aims to fill the country’s Strategic Petroleum Reserve to capacity this year.
That news followed a rare public statement last week from China’s top energy official, Zhang Guobao, head of the National Energy Administration, in the People’s Daily newspaper that China should take advantage of the falling global energy demand to increase its oil reserves. Mr Zhang said China will “encourage companies to utilize idle storage capacity to increase inventories.”

Oil prices have been rising lately. On Friday, oil closed up 3.9% to $46.34 a barrel on the New York Mercantile Exchange.

Though China doesn’t disclose its oil inventories on a regular basis, some energy watchers think the country has been building its stockpiles for some time. China has increased crude oil imports in recent months, and “the increase of imports is certainly caused by them filling” the strategic reserve, said John Kingston, global director of oil at Platts, an energy-reporting service.

Paul Ting, a U.S.-based energy analyst, estimates that about 25 million barrels of crude oil have been injected into China’s strategic tanks since August.

The U.S. buying isn’t expected to significantly affect oil prices over the long term. The U.S. Energy Information Administration expects global oil consumption to fall to 85.3 million barrels a day.

But the Chinese government’s hunger for oil has more potential to influence prices. “In our opinion, China’s inventory policy will be a critically important factor in determining global oil price,” said Mr. Ting.

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