China NBS (National Bureau of Statistics) just reported October refinery runs data at 11.89 mbd, only a slight drop from September’s all time high of 12.00 mbd. This comes as a bit of surprise to anyone strictly using import data as a proxy for refinery demand, because imports in October suffered a modest drop, falling to a recent low of 7.34 mbd (from 9.00 mbd in September).
The fall in imports was seen as a negative factor on prices and the supply/demand balancing that oil bulls were looking for, but the continuing surge in refinery demand can put them a bit more at ease.
The reason refinery demand did not fall as people expected was due to a modest draw in inventories, partially counteracting the modest drop in imports. Ursa estimates that inventories drew by 33.78 million barrels in October, or 1.09 mbd. This draw helps predict refinery demand correctly – more than 2 weeks ahead of when official data is released. Official NBS data can move the market, affecting prices for the better or worse depending on expectations.
In working with ClipperData, Ursa’s inventory data is a key input into the China Refinery Demand Report, which calculates refinery demand each week. Our unbiased calculations come out two weeks prior to official NBS data, allowing users to predict market movements more accurately.