US Energy Information Administration (EIA) estimates crude oil inventories in China increased by about 900,000 barrels per day (b/d) between January and August this year, essentially acting as a source of demand by removing barrels from the global markets.
The stock builds in
China limited the downward price pressure EIA would otherwise expect to see
with growing inventories, keeping the Brent crude oil spot prices in a
relatively tight range around $68 per barrel (b) in the second and third
quarters of 2025.
EIA estimates global
petroleum inventories rose by an average of 1.8 million b/d in the second and
third quarters in the October Short-Term Energy Outlook (STEO).
Global oil inventories
have been growing in 2025 as crude oil production from Opec+ members and non-Opec+
producers in North and South
America has outpaced global demand growth.
Between April and
August (the latest estimates EIA has), growth in China alone averaged 1.1
million b/d.
Similar levels of
global inventory growth would typically put downward pressure on crude oil
prices; however, the price of Brent increased slightly during this period,
averaging $68/b in the second quarter (2Q25) and $69/b in 3Q25.
EIA estimates total
liquid fuels inventories in non-OECD countries, including China, grew by an
average of 0.9 million b/d from January through August 2025. EIA estimates that
on average, 0.9 million b/d of crude oil and condensate was added to oil inventories
in China, making up most of the estimated global inventory builds of 1.4
million b/d over the same period.
China does not report
data on its oil inventories, so EIA assessed China’s stock growth based on
imports, exports, refining, and oil inventory data from third-party and
official sources.
EIA estimates the
additions to oil inventories in China by balancing crude oil and condensate
production, reported by the China National Bureau of Statistics, along with
imports, refinery runs, and export data from a collection of ship-tracking and
third-party sources.
Depending on the
source used and assumptions made, the range between different stock build
estimates is 0.5 million b/d on average and can be as large as 1.1 million b/d,
so EIA takes an average for this comparison.
Although EIA knows
some portion of China’s refinery capacity can utilise heavy fuel oil, it assumes refinery run
numbers are strictly crude oil for estimates.
In addition, since
public reports indicate that China directed its National Oil Companies to add
barrels of oil to inventories, EIA assumes both commercial and official
government storage facilities can be considered as part of their strategic
inventory stockpile.
Although these
estimates are based on limited information, they support the idea that
inventory growth in China was not available for trade on the global market,
supporting crude oil prices.
The numerous
geopolitical risks, along with shifting global oil trade flows and increased
use of shadow tanker fleets due to sanctions, increase the uncertainty around
estimating global oil balances in EIA's STEO.
Although EIA estimates
global oil inventory builds to accelerate in the STEO, averaging 2.2 million
b/d from the fourth quarter of 2025 through 2026, the portion of this estimate
that will show up in visible oil inventories and influence oil prices remains
uncertain.
EIA currently
forecasts that Brent crude oil prices will fall from an average of $68/b in
September to an average of $52/b in the first quarter of 2026, when global oil
inventory builds are estimated to be at their peak in the STEO.
If China continues to
add to oil inventories over the forecast at a rate similar to the 0.9 million
b/d from January through August of this year, crude oil prices could remain
higher than the forecast.
Conversely, a slowdown
in China’s oil inventory builds would likely put downward pressure on oil
prices as more oil shows up in visible oil inventory data. -OGN/ TradeArabia News Service
