Photo caption: Oil storage tanks. Credit: Oilprice.com
China is building new oil storage sites as it stockpiles crude while it is cheap. This year and next will see a total of 11 new storage sites built across the country, Reuters reported today, noting that the combined capacity of the new sites would come in at some 169 million barrels.
The amount is equal to two weeks’ worth of crude oil imports, Reuters also said. It compares to new oil storage capacity additions of between 180 and 190 million barrels for the period between 2020 and 2024, according to data from Vortexa and Kpler cited by the publication.
China has been buying more crude oil than it can consume and export for months now, taking advantage of stable prices and discounts for sanctioned crude from Russia and Iran. The country does not report inventory numbers but analysts estimate them on the basis of import and refinery runs data.
In August, for instance, China was stockpiling crude at a rate of 1 million barrels daily. The average rate for the year so far has been estimated at around 990,000 barrels daily. Over the next year or so, this rate may soften to around half a million barrels daily, at least according to Goldman Sachs’ Daan Struyven.
Even with this stronger inventory buying from China, the majority of commodity analysts seem to be certain the oil market would tip into oversupply either by the end of this year or in 2026. This would drive prices even lower, the analysts believe, with some citing Brent crude at $50 and others seeing it dipping below that.
Goldman Sachs sees the supply overhang at some 1.9 million barrels daily. The International Energy Agency has predicted a record overhang of as much as 3 million barrels daily. Most analyses cite robust production from the U.S. shale patch even though growth there has slowed, sluggish demand growth, and OPEC+ output boosts, even though these are falling short of targets.
=== Oilprice.com ===
Dangote Refinery strike cost Nigeria 600,000 barrels of oil output
A three-day national strike prompted by layoffs at the Dangote refinery has led to production losses of 600,000 barrels, the chief executive of the Nigerian National Petroleum Company has said.
“I think it was unfortunate that the Dangote and PENGASSAN issue led to strike and whenever there is strike and critical staff manning critical facilities are not available and optimum production is almost impossible. In this particular case, we actually lost significant production of over 200,000 bpd that was deferred,” Bayo Ojulari told media.
The main Nigerian oil union launched a nationwide strike last month after the Dangote refinery fired as many as 800 workers. The strike lasted for three days, threatening to reduce fuel supply in the country relying on the new processing facility and in several neighboring countries, which import fuels from Dangote.
The Nigerian oil workers’ union, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), said that the Dangote refinery, owned by Africa’s richest man Aliko Dangote, has fired the workers for unionizing. The Dangote management, for its part, said that the dismissals were part of staff restructuring and those dismissed engaged in “acts of sabotage”.
The strike came at a time when Nigeria’s oil industry is staging a recovery, with oil production on the rise and investments climbing. Production as of September—before the strike—averaged between 1.7 million barrels daily and 1.83 million barrels daily, with active rigs rising from 31 at the start of the year to 50 by July, according to a report from the oil ministry.
According to NNPC’s Ojulari, the September average was 1.68 million barrels, which was an increase from August. In natural gas, Nigeria produced 7 billion cubic feet daily last month, the top executive also told media, adding that by the end of the year, oil production should rebound to 1.8 million barrels daily.
=== Oilprice.com ===
