Onshore Crude Oil Inventories Are Collapsing At Fast Rate – Report

An energy and environmental geo-analytics company, Kayrros has stated in its latest report shared by Rigzone that onshore crude inventories have been tightening and look like they are at an inflection point.

Kayrros noted in its report quoted by Rigzone that the slow trend that began in June had recently gained momentum as global onshore stocks were plunging at their fastest yearly pace in the week leading to September 4.

“China, despite tepid domestic demand due in part to its zero-Covid policy, is leading the way. Its destocking is accelerating. It has now retraced most of the stockpiles accumulated since Russia’s invasion of Ukraine,” Kayrros said in the report.

It continued, “At latest count, its above-ground crude stocks were just slightly above pre-invasion levels. China, by cutting back on imports, has now retracted more than two-thirds of the ~90 mb build accumulated from mid-March to early June.

At last count, its onshore stocks sat just 13 million barrels above their pre-Ukraine-invasion level, versus 76 mb at their June peak.”

In contrast, on-the-water stocks have gained more than 90 million barrels as crude in transit and floating storage have surged. “The latest weekly build in waterborne barrels, extending a recent trend, roughly matches the size of the onshore draw, and partly explains it,” Kayrros said in the report.

“Since mid-August, on-the-water stocks have gained more than 90 mb.

This may be an indication that Russian crude sellers, faced with reduced Chinese imports and a looming European embargo, are having renewed trouble finding a home for their barrels. Indeed, the surge in oil on the water reflects in part a steep increase in the number of tankers loaded with Russian crude.”

Russia might also soon start to feel the pressures from sanctions despite its resiliency as its cement output has been plunging, according to Kayrros.