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China boosts oil reserves, ignoring U.S. push for global release

Published Feb 27, 2022 07:50PM ET Updated Feb 27, 2022 07:57PM ET
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2/2 © Reuters. FILE PHOTO: Oil and gas tanks are seen at an oil warehouse at a port in Zhuhai, China October 22, 2018. REUTERS/Aly Song/File Photo 2/2
 
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By Chen Aizhu and Dmitry Zhdannikov

LONDON (Reuters) -China has ramped up purchases into its oil reserves this year even as oil prices soared, despite calls from Washington for a global coordinated stocks release to help cool the market, industry data showed and traders said.

Washington has sought cooperation from China to bolster the impact of a coordinated release of strategic oil stocks from major consumers to dampen the surge in oil prices, which topped $100 a barrel this week for the first time since 2014 after Russia invaded Ukraine. [O/R]

On Thursday, President Joe Biden said the United States was working with other countries on a new release following on from one in November last year.

The United States had announced a release of 50 million barrels from its own stocks in November and said China, India, Japan, South Korea the UK would do the same. The move came as U.S. gasoline prices soared and inflation spiked.

India, Japan, South Korea and the UK said they would release some modest volumes into the market. China, the world's No.2 consumer and largest importer, never officially committed to the move and has been buying more for its reserves instead.

Two oil trading sources said Beijing ramped up purchases immediately after Chinese President Xi Jinping met Russian leader Vladimir Putin in early February in Beijing.

China's National Food and Strategic Reserves Administration did not respond to a request for comment.

A spokesperson for China Petroleum (NYSE:SNP) and Chemical Corp, known as Sinopec (NYSE:SHI), said the company’s January crude oil imports were steady from a year-earlier and the company is still compiling February data. He did not elaborate further.

The U.S. government declined to comment when asked about the reasons why China had not participated in the release of oil from storage.

BUYING SPREE

"We received fresh requests (from Chinese buyers) to bring more oil into China right from the start of February," a senior source with a major oil trading desk said.

Another source with a major trading company said he and his rivals brought several cargoes of crude into China from the United States during February.

Trading sources said they did not know if China knew about the upcoming invasion of Ukraine, they said it was clear it decided to increase its oil stocks even as prices soared.

China's total oil stocks rival in size U.S. strategic stockpiles.

One Chinese oil trading executive said earlier this month his company was told to work on a plan for a release of oil from storage but then no final orders from the government followed.

Two other China-based trading executives said an unusual buying spree by Unipec, the trading arm of Sinopec, over the past few weeks was partly to boost stocks.

"Crude oil inventories in China are up roughly 30 million barrels since mid-November, with 10 million barrels in refineries and 20 million in commercial terminals," said Augustin Prate from data analytics consultancy Kayrros.

Kayrros puts total crude oil inventories in China, derived from satellite monitoring of tanks, at 950 million barrels.

A U.S. source with knowledge of the latest talks between the United States and the International Energy Agency said the United States was working with the IEA, the energy watchdog for developed countries, on releasing further reserves. China is not a full IEA member.

"We are prepared to take global action when it's needed," a U.S. government official said, asking not to be named.

"This is a different scenario than the one we had in November as we are now in a serious crisis in Ukraine."

China boosts oil reserves, ignoring U.S. push for global release
 

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Comments (7)
Todd Gray
Todd Gray Jun 25, 2022 11:07AM ET
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And, they paid substantially less per barrel than the west. What Reuters overlooks, is the Chinese government cares more about its people and less about international political agenda - at the expense of it's people, than the west does. That leaves them with the high ground, and better off in the future. Now, they will implement growth measures while the west tightens. The west can either choose war, ramp up suffering & poverty, or to put their people above their elitist political agenda. The west cares more about implementing their carbon tax credits plan and tech controls than they do their people.
Scott Bailey
Scott Bailey Feb 27, 2022 10:57PM ET
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The world has 0 respect for Biden
Andrew Ulferts
Andrew Ulferts Feb 27, 2022 8:34PM ET
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It makes no sense to release SPR during potential global military conflict. The SPR is no for economic relief. This administration is crushing the democratic party. Thank God. Maybe more solar panels and windmills will help us in our coming time of need. Power our tanks and jets with lithium batteries.
Kaveh Sun
Kaveh Sun Feb 27, 2022 8:34PM ET
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R u that naive. Lithium on Boeing dreamliners burn and nearly crash at least 2 planes. There is no sun at night. Wind comes and go at any will.
Kaveh Sun
Kaveh Sun Feb 27, 2022 8:33PM ET
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If Biden stops his green #, usa has enough oil for its people and plus more for export.
John Laurens
John Laurens Feb 27, 2022 8:06PM ET
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Smart. Trump would have done the same. Biden poops his pants.
Don Getty
Don Getty Feb 27, 2022 8:05PM ET
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commoditiy prices are all up, I suspect you'll find china loaded up on everything - knowing Poutine was going to invade - its funny - Poutine tried to have Zelensky removed but its going to be Zelensky who gets the last laugh - Poutine is about to find he has no friends in the world - Brutus why are you sharpening your knife!
John Laurens
John Laurens Feb 27, 2022 8:05PM ET
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It would have been helpful if president pants pooper hadn’t removed all of President Trump’s sanctions on Russia and allowed them to continue building their gas pipeline. But, when the Biden crime family is in bed with Russia, he’s gotta take care of his buddies.
Kingy Yu
Kingy Yu Feb 27, 2022 8:03PM ET
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Biden asked OPEC to ramp up oil production,got rejected. Ask US fracking companies to ramp up production, got rejected. Ask China to release reserve, got rejected. Shame!
 
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