BEIJING: China is moving forward with plans to buy up oil for its emergency reserves after an epic price crash, according to people with knowledge of the matter.
The world’s biggest importer is taking advantage of a 60% plunge this year to snatch up cheaper barrels for its stockpiles, a source of considerable speculation in the oil market because of the government’s reluctance to release information about their formation, size or use.
Beijing has asked government agencies to quickly coordinate filling tanks and using financial tools like options to lock in current low prices, the people said, asking not to be identified because the matter is confidential.
In addition to state-owned reserves, Beijing may use commercial space for storage as well, while also encouraging companies to fill their own tanks, the people said. The initial target is to hold government stockpiles equivalent to 90 days of net imports, which could eventually be expanded to as much as 180 days when including commercial reserves.
China is also planning to announce the fourth batch of strategic reserve sites, the people said. The expansion project has the dual advantage of creating larger emergency reserves and as an economic stimulus project to spur construction opportunities as the country recovers from the coronavirus.
Brent crude, the international benchmark, extended gains on Thursday to rise almost 13% to US$27.88 a barrel in London.
According to SIA, China had about 996 million barrels of oil combined in strategic and commercial storage as of March 31 — Bloomberg.
https://www.thestar.com.my/business/business-news/2020/04/03/china-starts-buying-oil-for-state-reserves-after-price-crash
