Sep 6, 2025

As the oil market moves closer to a long-anticipated glut, traders are closely watching buying from China to see if it will absorb an excess that the world’s crude producing nations are set to pump. Author of the article: h6q4awd{na)(5v5dbvwcm}99_media_dl_1.png IEA Article content (Bloomberg) — As the oil market moves closer to a long-anticipated glut, traders are closely watching buying from China to see if it will absorb an excess that the world’s crude producing nations are set to pump. THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY Subscribe now to read the latest news in your city and across Canada. Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others. Daily content from Financial Times, the world's leading global business publication. Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account. 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Get email updates from your favourite authors. THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK. Create an account or sign in to continue with your reading experience. Access articles from across Canada with one account Share your thoughts and join the conversation in the comments Enjoy additional articles per month Get email updates from your favourite authors Sign In or Create an Account Email Address Article content “The key question is where stockbuilds will turn up,” HSBC Holdings Plc analysts including Kim Fustier wrote this week. “If China continues to absorb excess oil volumes via its strategic reserves, as it did in in the second quarter, stockbuilds in the OECD could be muted.” Article content The global market’s capacity to absorb barrels will be among talking points when OPEC+ nations meet to discuss supply on Sunday. Saudi Arabia wants the group to accelerate the return of another tranche of halted output — adding to concerns about a surplus that would depress prices — but all options are on the table. Article content About 10% of the nation’s crude stockpiling has been directed to its strategic petroleum reserves, according to Kayrros analyst Antoine Halff. There have also been additions to the country’s refining capacity, such as CNOOC Ltd.’s Daxie plant, and the addition of new tank space. Article content Article content It’s also possible that Beijing wants to hold more barrels in storage given the heightened levels of geopolitical risks over the last few years, the Oxford Institute for Energy Studies wrote in a note. Article content While China’s flagship crude futures contract was flashing a softer market over recent weeks, the world’s two main benchmark’s continued to suggest relatively tight supplies. Article content That’s because inventory builds so far this year have avoided western hubs. In Cushing, Oklahoma, the tank farm of about 15 storage terminals that underpins the West Texas Intermediate futures contract, inventories have been repeatedly near multi-year seasonal lows this year. Article content The International Energy Agency says that in the second quarter global oil stockpiles increased by the most since the third three months of 2020, when the global economy was still being ravaged by the Covid-19 pandemic. Over that period, stockpiles in the developed world climbed by 60,000 barrels a day, while expanding by more than a million barrels a day everywhere else. Article content It’s still possible that prices will need to fall from current levels for China buy in a big way, though, according to Frederic Lasserre, head of research at Gunvor Group. Advertisement 1 Article content Bank of America Corp. wrote last month that there’s about a billion barrels of empty tank capacity available across the globe to fill with inventories, which could mean that markets avoid falling into a heavily bearish structure. Article content There are signs that the surge in production is starting to come, though. Brazil’s output approached 4 million barrels a day for the first time over the summer, and a new field is due to start in the country before the end of the year. Guyana has moved from producing nothing to almost a million barrels a day and output in Canada’s oil heartland of Alberta hit a record in July. Article content At the same time, despite concerns about a decline in US output, the Energy Information Administration has consistently revised oil supply estimates higherover the last few months. Article content Article content “When we look at OECD inventories we’re still at a relatively low level,” Nadia Martin Wiggen, a director at Svelland Capital, said in a Bloomberg TV interview. “Yes, there is this supply glut coming according to expectations, but we need to see that materializing.” Article content Article content