China Upends the Weak Oil-Demand Narrative

China’s latest oil import data has been rather bullish, with November imports rising 5% year on year. Not only that, but China is building new storage capacity, so it can keep buying more crude, instead of demonstrating that its oil demand growth is weakening, as forecasters say. China is making oil demand forecasting uncertain.

FGE NexantECA, for instance, recently reported that China’s apparent demand in October had been revised downwards to 14.6 million barrels of crude daily, or 570,000 barrels daily less than earlier expected. At the same time, the forecaster, along with others, expects the world’s top oil importer to boost its oil purchases next year—because it is building a massive reserve of crude oil, it seems.

As a result, Asian oil demand, which FGE NexantECA expects to dip this year by 38,000 barrels daily, will next year rebound, adding 36,000 barrels daily. This will make Asia one of two continents where the forecasters see demand for oil growing next year, while the rest of the world is seen recording a dip.

Forecasts, however, are uncertain things. Bloomberg this week reported that China’s continued oil buying for its storage was “masking” a slowdown in oil demand growth driven by the adoption of electric vehicles. Yet the latest car sales figures out of China show an annual decline of 32% for total car sales over the first week of December, and a 17% annual decline in EV sales specifically. This suggests that EV sales, even in China, are not on an uninterrupted upward curve, erasing barrel after barrel in oil demand with each passing day.

Related: US Drillers Add Oil Rigs As Analysts Warn of Incoming Glut

According to data from Kpler, China’s oil in storage is currently above 1.5 billion barrels. Storage capacity, per Energy Aspects, is 2 billion barrels—and it could be expanded by 260 million barrels in 2026, even as actual imports remain flat on 2025, according to the forecaster—unless they jump.

“Actual imports could be much higher than our forecasts,” especially over the second half of the year, one Energy Aspects analyst told Bloomberg, as the firm forecast China’s oil imports next year at 11.4 million barrels daily, or flat on 2025. And yet China’s November average was 12.38 million barrels daily as stockpiling apparently intensified.

China has been stockpiling crude oil at a daily rate of around 1 million barrels this year. It has also been building new storage capacity. This year and next will see a total of 11 new storage sites built across the country, with a combined capacity of some 169 million barrels. According to Citigroup, China will continue stockpiling crude at a rate of 900,000 barrels daily next year, Bloomberg reported, adding this would be an increase on stockpiling rates of 800,000 bpd since March this year. When you add January and February, the stockpiling rate rises to 990,000 barrels daily.

Other forecasters also see an accelerated rate of putting oil into storage next year, with FGE seeing an increase from 480,000 bpd this year to 600,000 bpd. The difference in figures is likely due to the fact that China does not release official data on oil in storage, which makes forecasters make their own calculations based on whatever data and observable information is available. Reuters, for instance, calculates the oil in storage by subtracting imports from refinery run rates—hence the 990,000 bpd average rate of stockpiling.

This stockpiling on the part of China has become a major reason for the relative stability of oil prices this year. This stability has, among other things, been based on the rather reasonable assumption that if China, the world’s largest oil importer, has built a supply cushion in case of disruption, then a surge in demand following such a disruption is unlikely. This assumption has acted as one more lid on prices, along with the regular reports about electric vehicles replacing internal combustion engines in the world’s biggest car market.

With China seen ramping up the rate at which it puts oil into storage, the price stability will likely remain a feature of oil markets in 2026, not least because China can absorb a lot more crude in storage than it is currently putting in. According to OilX, the country’s storage caverns are only half full, meaning there is a lot of space to boost that reserve cushion.

Yet while so many forecasters remain convinced that global oil demand growth is ailing, the International Energy Agency just came out with a report in which it revised its demand projections higher and its glut projections lower. Total global oil supply dipped by 610,000 bpd in November compared to October and by a whopping 1.5 million bpd from September’s all-time high, the IEA noted in its latest monthly report. It still sees a supply overhang of a substantial 3.84 million barrels daily, but that is down from a previously forecast glut of 4.09 million barrels daily, because demand for oil is now seen as stronger. China and 2026 can still serve some surprises.

By Irina Slav for Oilprice.com

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