Chinese demand is one of the few bright spots in a generally depressed crude oil market. The phenomenally high amount of crude oil (and refined products) in storage around the world, meanwhile, is a big cause for concern for anyone wishing to see a demand upstick.
Given those two facts, this doesn’t look good:
BEIJING, Nov 3 (Reuters) – China OGP, an oil industry newsletter issued by Xinhua news agency, will no longer publish data on China’s stockpiles of crude oil, gasoline and diesel, it said on Tuesday.
The move removes the only public source of information on Chinese crude and fuel stockpiles, key information for oil traders trying to assess the real level of demand in China, the world’s second-biggest oil consumer.
“China OGP will halt the release of China’s crude oil, gasoline and diesel stockpiles held by CNPC and Sinopec Group because these figures are no longer available,” a brief note at the start of the biweekly newsletter said.
It did not explain further or say if it had been ordered to withhold the information or whether the publication of the data might resume in future.
Still, the data they’re talking about only relates to oil held in storage, rather than, say, crude imports — and the newsletter has only been publishing for a year.
Moreover, as the Reuters report notes, the OGP reports fell short of perfect perspicacity anyway; for one thing, they only provided data for CNPC and Sinopec.
But while there are no doubt other ways of inferring stock changes, the OGP was a very widely-used measure. And a look at the IEA’s latest monthly oil market report underlines that the OGP was one of its main sources of information on China’s oil stocks, too – in fact the report includes a special feature on ‘China’s puzzling inventories’:
Additional data from China are always welcome. Yet, the October 1 issue of China OGP included upward
product stock revisions that have generated many questions. OGP reported gasoline and gasoil stocks
higher on average by 71% and 60%, respectively, from January 2008 to July 2009 versus corresponding data from previous issues. Starting in January 2008, gasoline and gasoil stocks were revised up by 18.4 mb and 21.4 mb, respectively, with the baseline changes carried through the remainder of the data set. Month‐on month stock changes following January 2008 remained unchanged from the previous figures up until July 2009. Moreover, the series in the October 1 issue did not include data points before January 2008, leaving open the question as to when exactly the inventory change occurred.
OGP provided no explanation for the change in its monthly report, but a Dow Jones Newswire story
indicated that OGP attributed the change to CNPC data. The long holiday from October 1‐8, which included the 60th anniversary of the founding of the People’s Republic of China and the traditional Mid‐Autumn festival, closed offices in China, including those of OGP. Consequently, further insights were not available as this month’s OMR went to press.
If the OGP ceases publication, forecasting oil demand could become more difficult. The IEA, for instance, pointed out back in September that its forecasts could be subject to revision because of the Chinese inventories picture, somewhat complicating the picture.
In hindsight, the newsletter’s October feature on Chinese data ends on what seems a rather poignantly optimistic note:
Improved data should ultimately contribute to a more comprehensive understanding of the Chinese stockholding position. Still, the lack of clarity surrounding this disclosure creates near‐term uncertainty not only on inventories but also on demand, as discussed in this report’s Demand section. Since monthly stock changes for both gasoline and gasoil remained largely intact from the old series, it remains unclear whether OGP’s data are actual reported monthly inventories or estimates based on monthly changes. Questions also persist over stocks held by other entities, as suggested by sometimes‐stark differences between the OGP monthly stock changes, based on only CNPC and Sinopec, with those reported by China to the Joint Oil Data Initiative (JODI).
On a side note, there have been some noises about China joining the IEA — it (apparently) has close to the 90 days cover required for membership. Whether it would want the disclosure requirements that go with membership is another matter.
Crude inventories still a problem (FT Alphaville)
Predicting oil demand is a mug’s game in 2009 (FT Energy Source)