China’s Oil Refineries Build Inventories Amid Lower Processing, Commerzbank Analyst Says

China’s Refineries Build Inventories Amid Low Processing, Oil Demand Concerns Persist

China's refineries have taken advantage of recent low oil prices to build inventories rather than increase crude oil processing, according to Carsten Fritsch, a commodity analyst at Commerzbank. Despite high crude oil imports in April, refinery capacity utilization dropped to its lowest level since 2022, reaching just below 74%. This indicates that refineries are not operating at full capacity.

Crude oil processing in April fell to 58 million tons (14.1 million barrels per day), which is significantly lower than in March and 1.4% down from the same period last year. This suggests that refineries are cautious, possibly due to ongoing concerns about demand in the world’s second-largest oil-consuming market.

Additionally, domestic oil production in China increased by 1.5% compared to last year, but despite this, crude oil stocks climbed by nearly 2 million barrels per day in April. As a result, China’s apparent oil demand, after adjusting for exports, was 5.5% lower than the same period last year, highlighting the continued challenges faced by the country’s oil consumption.