Onshore crude oil inventories have been tightening and seem to be at an inflection point, according to energy and environmental geo-analytics company Kayrros.
In a report sent to Rigzone on Monday, Kayrros stated that what started in June as a slow trend recently picked up momentum “with global onshore stocks plunging at the fastest pace of the year in the week to September 4”.
“China, despite tepid domestic demand due in part to its zero-Covid policy, is leading the way,” Kayrros said in the report.
“Its destocking is accelerating. It has now retraced most of the stockpiles accumulated since Russia’s invasion of Ukraine. At latest count, its above-ground crude stocks were just slightly above pre-invasion levels,” Kayrros added.
“China, by cutting back on imports, has now retraced more than two-thirds of the ~90 mb build accumulated from mid-March to early June. At last count, its onshore stocks sat just 13 million barrels above their pre-Ukraine-invasion level, versus 76 mb at their June peak,” Kayrros continued.
Confirmed weekly Covid-19 cases in China have risen for the past five weeks but are still well below a peak reached earlier this year, according to the latest information from the World Health Organization (WHO).
As of September 12, 5.01pm CEST, there have been 6.84 million confirmed cases of Covid-19 in China, with 25,315 deaths, WHO data shows. As of August 31, 3.45 billion vaccine doses have been administered in the country, according to the latest WHO figures.
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In a mirror image of onshore stocks, crude on the water, the combination of crude in transit and floating storage, has surged, Kayrros outlined.
“The latest weekly build in waterborne barrels, extending a recent trend, roughly matches the size of the onshore draw, and partly explains it,” Kayrros said in the report.
“Since mid-August, on-the-water stocks have gained more than 90 mb. This may be an indication that Russian crude sellers, faced with reduced Chinese imports and a looming European embargo, are having renewed trouble finding a home for their barrels,” Kayrros added.
“Indeed, the surge in oil on the water reflects in part a steep increase in the number of tankers loaded with Russian crude,” Kayrros continued.
In its latest report, Kayrros also noted that Russia’s domestic cement output continues to plunge. The company outlined that this is “perhaps a sign that international sanctions are beginning to bite in earnest”.
In a previous Kayrros report sent to Rigzone earlier this month, the company said Russia’s remarkable resilience in the face of international sanctions could soon be tested.
“Russian cement output has been coming off after holding up within its normal range since the invasion of Ukraine. While it is too early to draw conclusions, the trend warrants monitoring,” Kayrros noted at the time.