Now a satellite imaging firm called Orbital Insight claims to have an answer. It says that in May, Chinese inventories stood at 600 million barrels, substantially larger than commonly thought and nearly as big as the U.S. Strategic Petroleum Reserve. Chinese storage capacity, which includes working inventory, is four times greater than widely used estimates, the firm says, adding that it has not only been able to count storage tanks, but it has also used imaging techniques to figure out how much oil is in the tanks.
The issue could influence expectations in oil markets. If China has built larger reserves than previously estimated, that means much of what looked like oil demand over the past couple of years was not a result of higher consumption but of strategic planning. It would make OPEC’s task of cutting output to drive up prices more difficult. And it could provide a buffer for China in the event of a sudden disruption in imported supplies. – READ MORE
