Here is update on China’s Stage 2 of SPR reserve development. Stage 1 SPR tanks will hold 102 million barrels crude (only partly filled now) & Stage 2 could hold an additional 170-209 million barrels of crude.
I picked this out to remind crude price forecasters to avoid thinking the current estimates of $45-55/Bbl crude price will last any length of time and avoid looking as foolish as T Boone estimates of $150-200/Bbl prices (and stuck lot New England diesel purchasers with $4/gal diesel in $2.75/gal market).
The WW strategic reserves are not estimated at ~4 billion barrels with 1 billion barrels government/state owned and the rest private owned reserves. The countries filling these SPR’s add around 1 million bpd to total crude demands when there isn’t any problems. Recent size increases by US and additions of new China & India SPR’s and the increased government buying led to a lot of crude price increase until the high cost at $85-100/Bbl drove them out of the market. Current low price levels as well as MidEast uncertainty will hasten fill rates and give price support to more fundamental values than current demand destruction led pricing.
The US average had been ~140 MBD until Venezuelan Strike & Hurricane impacts led to increase size from 574 Million BBL to 715 Million BBL and the purchase rate jumped to fill rates of 10-40 Million BBl per year to achieve it and new size relates to ~360 days of imports. The US & Japan have similar high levels of SPR that are in the 550-700 million BBL range and equate to 180-360 days of operation. IEA members are required to maintain 90 days of import storage (except for exporting countries of course) and make up a bulk of the other 26 countries accounting for a great deal of the other 2.5 billion BBL SPR crude stored. And Russia, China & India are fast adding SPR volumes and development as this article indicates on China’s 2nd Stage taking it to half of US & Japans level already. Like the US which imports +50% of its Crude, both China & India are very exposed on import crude supplies since China imports nearly 1/3 of its crude now & India imports nearly 70% if its crude supplies.
The current SPR size in both countries are extremely low comparatively (India=2weeks & China ~45-60 days) and so these additional pressure on demand will continue to grow and be exaggerated given the increasing fill requirements and compressed timing which will also continue cause self-defeating price impacts due required crude lower purchase price levels.
<Note Wikipedia now has great recap WW on various countries SPR volumes @