SINGAPORE (REUTERS) - As China closes in on the US as the world's biggest crude oil importer, demand from private refiners and stockpiling of cheap oil is expected to keep imports at record levels after a wobble in the third quarter.
Despite slower growth in recent months - crude imports rose just 1.3 per cent in September on a year earlier - buying for October-November delivery has picked up strongly, traders and analysts say.
The purchases will ease concerns of a sharp slowdown in Chinese buying and support prices in coming months, analysts said.
The increased buying has shown up in tanker movements and freight rates, said Energy Aspects analyst Virendra Chauhan, and analysts are upgrading earlier forecasts for second half growth.
"Despite a slowing Chinese economy, crude imports remain robust on the back of accelerated stockpiling activities into operating and commercial storage," said Wendy Yong, analyst at oil consultancy FGE.
Since July, China has also granted nearly 700,000 bpd of crude import quotas to small refiners, known as "teapots", or roughly 10 per cent of China's current total imports, as part of efforts to boost competition and attract private investment, creating a new source of demand.
"The teapots are super-active," said one oil trader, with many racing to fill their new quotas.
And state-owned refiners are restocking after a third-quarter lull. Unipec, the trading arm of Asia's top refiner Sinopec, bought 6 million barrels of North Sea Forties crude and 2.9 million barrels of Russian ESPO for loading this month, and it has also stepped up Angolan crude purchases for November.
To accommodate the oil, new storage tanks on southern Hainan island have either been put to use or are due to be filled with crude from end-2015.
FGE expects China's crude imports in the second half to rise by 12 per cent from the first six months, up from a previous estimate of 10 per cent. It forecast China's crude imports to rise 9 per cent for the year.
Such a rise would take Chinese imports to 6.75 million barrels per day, not far off US imports of 7.3 million bpd.
Teapot refineries are unlikely to utilize the full amount of quotas alloted by the end of the year, but are widely expected to step up purchases in 2016.
At least three of the seven refiners to receive quotas, including Dongming Petrochemical and Panjin Beifang Asphalt Fuel Co. which have the biggest allocations, have imported crude, traders said.
Analysts said China would also continue to take advantage of low oil prices to build up its strategic petroleum reserves (SPR).
"Moving into 2016, crude imports are expected to pick up with the commissioning of a few major SPRs, though overall growth could ease to 5 percent from a stronger base amidst softer growth pace in crude runs," Mr Yong said.
China imports nearly 60 per cent of the crude it consumes and aims to meet the widespread standard of stockpiling enough to cover 90 days of net imports.