“Truth is we do not really know what is happening to China’s oil reserves at the moment,” said Analytical Center expert Alexander Kurdin in a live interview on RBC TV.
On the whole, there is very healthy demand for oil around the world
According to the expert, JP Morgan analytics have made some guestimates about what is really happening in China. However, the figures they have arrived at vary wildly, the expert said. China’s strategic reserve is 250 million barrels. But there are also commercial reserves whose amount can be estimated only approximately, Mr. Kurdin noted. “In any event, what is important is that the situation in the oil market is not what it was in Q1 of this year. It has markedly improved now,” the expert said. “In Q1, the fast growth of reserves in China acted as a factor keeping the oil price down but now the glut of oil in the global market is not enough to allow the growth of Chinese oil reserves to be a deciding factor determining whether the price is going up or down.” Mr. Kurdin believes that China is going to be slowing down its expansion of oil reserves. “The recently published five-year plan talks about restricting growth and so currently the situation in the market is improving,” the expert explained.
Mr. Kurdin believes that in Q2 the oil market will demonstrate some good results. “In the last six months of the year global demand for oil traditionally goes up on the first six months, so I would not expect a significant decline in demand at the moment. I would say that the situation was pretty hard in the first six months but we have weathered out those difficulties,” the expert noted. “If the OPEC keeps their output at least no higher than it was in May, we are going to end up with a noticeable shortage of oil in the global market and that will drive reserves down.”
As far as Mexico is concerned, the situation is rather difficult there at the moment, according to Mr. Kurdin. “The oil industry there is undergoing reforms so I personally would not go making predictions about it at the moment,” the expert said. “Things change there quite often and some unorthodox steps could be taken.”
Mr. Kurdin also noted the unexpectedly high demand for oil all over the world: in Europe, North America, South East Asia and South Asia.