(Bloomberg) -- China has begun running down its crude oil stockpiles, which could signal that refiners are getting ready to boost fuel exports as part of the government’s efforts to revive the economy.  

Onshore crude inventories stood at 909 million barrels as of Sept. 15, the lowest since May 12, according to Emma Li, an analyst with Vortexa Ltd. About 1 million barrels a day has been drawn from stockpiles over the past three weeks, she said. Satellite data firm Ursa Space Systems puts the figure at 1.05 billion barrels, down 7.5 million barrels from the prior week, and the fourth weekly draw in five, according to analyst Geoffrey Craig.   

The reduction may only be seasonal, but it could also be an indication that processors are ramping up run rates in anticipation of a push to produce and export more fuels, including gasoline and diesel. Refiners and traders have applied for an extra 15 million tons of export quotas, which, if approved, would raise allocations so far this year to a level similar to that seen over the whole of 2021. 

National oil companies are considering raising their utilization rates by 10% to 15% next month, according to a note from industry consultant FGE, although whether the extra quotas are granted is still subject to jockeying between different government departments, said Energy Aspects Ltd. 

JP Morgan Chase & Co., meanwhile, said it thinks China is unlikely to approve that level of exports, calling the volumes applied for excessive. 

Oil refining activity has been holding near pandemic-era lows in recent months. China has been slow to use up stockpiled crude because of a weaker economy and the government’s stringent virus controls, which have stifled the usage of transport fuels and slowed petrochemicals demand.

Events Today

(All times Beijing unless noted otherwise)

  • IEA webinar on China’s Electric Power Sector Transformation, 15:00
  • EU-China Energy Cooperation Platform’s Future of Gas panel discussions, focusing on supply security and carbon capture, 15:00
  • China Mining Conference and Exhibition, online, day 1

Today’s Chart

The slump in China’s metals-intensive property market appeared to deepen in July and August, says Bloomberg Economics. Fresh cuts in mortgage rates and efforts by local governments to generate demand for housing are failing to get traction, and the sector is set for a painful, long-term adjustment. Decisive policy steps could be needed to prevent a crash scenario.

Housing Demand in Deep Slump

On The Wire

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  • Taiwan to Buy $600m in Iowa Corn Goods as US-China Tension Brews
  • Chinese Metal Producers Expand Stakes, Develop Acquired Mines
  • Nickel Industries Signs Cooperation Pact With QMB New Energy
  • Senators Seek Secondary Sanctions on Russian Oil Purchases
  • China Scoops Up Cheaper Argentina Soybeans as US Harvest Begins

The Week Ahead

Thursday, Sept. 22

  • EU-China Energy Cooperation Platform’s Future of Gas panel discussions, focusing on competitive markets and renewable gas, 15:00
  • China Mining Conference and Exhibition, online, day 2
  • USDA weekly crop export sales, 08:30 EST

Friday, Sept. 23

  • Bloomberg China economic survey for September, 10:00
  • China weekly iron ore port stockpiles
  • Shanghai exchange weekly commodities inventory, ~15:30
  • China Mining Conference and Exhibition, online, day 3

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