Oil Near $100: China’s Demand Story Doesn’t Add Up | Art Berman

Summary

Art Berman challenges the consensus view that China's lower crude imports are mainly a strategic petroleum reserve draw. He points to a roughly 3 million barrel per day drop in Chinese refinery runs, implying materially weaker Chinese demand for gasoline, diesel, and jet fuel. After adjustments, he estimates China's real oil demand is down about 2 million barrels per day, a warning for crude oil and global energy demand.

• Chinese refinery runs have fallen from about 15 million barrels per day to roughly 12-12.5 million barrels per day.
• Berman estimates real Chinese oil demand is down about 2 million barrels per day after accounting for reduced refined product exports and possible product inventory draws.
• He questions the strategic petroleum reserve explanation because crude reserves still must be processed by refineries, and refinery runs are down sharply.
• He compares the 4 million barrel per day China import decline to the US shale supply surge that helped push oil from about $110 to $50.
• The signal is weaker Chinese gasoline, diesel, and jet fuel demand, with potentially bearish implications for crude oil.