China imported about 6 million barrels/day of crude oil last month, up 10% over June imports. But the country did not increase its refineries inputs at all, leading me to conclude that China is stockpiling crude which in turn is creating phantom demand in the marketplace.
The country first announced that it would begin building a strategic petroleum reserve about seven years ago. Since then it has built and filled more than 100 million barrels of above-ground storage, and has committed to added another 200 million barrels of storage in a second phase. The ultimate goal has been to stockpile a 100-day supply of crude by 2020. At current consumption rates, that’s close to 600 million barrels, which is about 50% higher than when the first barrels were added in 2005.