(EnergyAsia, October 7 2016, Friday) — China’s increased oil buying to stock up its strategic petroleum reserves may have kept crude prices from collapsing over the last eight months, said analysts.

The oil markets have so far defied widespread doomsday predictions most notably made by Goldman Sachs and Morgan Stanley early this year that crude prices could plunge below US$20 a barrel.

Instead, Brent crude has held above US$40 a barrel for most of 2016, recently surging to a four-month high of more than US$50, thanks to a combination of slower production growth and continued strong global demand.

Another factor could be at play: China, which has been buying up oil for stockpile at a faster rate than previously reported. Since launching its strategic stockpiling programme in 2004, the Chinese government has told the local media that it has accumulated just under 300 million barrels of crude oil to ward off supply disruption. Barron’s, the US financial newspaper, reported the stockpile had risen to 369 million barrels by mid-2016.

But according to US-based satellite-imaging firm Orbital Insight, China may have accumulated as much as 600 million barrels at its eight terminals located in seven cities. Seven are aboveground facilities in the cities of Huangdao, Zhoushan, Zhenhai, Dalian, Dushanzi, Lanzhou and Tianjin while Huangdao also has an underground terminal.

Orbital Insight made its estimate based on a study of satellite images of the country’s aboveground storage facilities, its calculations of the capacity of each terminal and tank, and existing data from industry sources. The number would be significantly larger if underground tanks and oil kept in floating storage tanks were available.

In 2009, China launched the first phase of a long-term plan to build large storage terminals across the country.

Analysts said China has stepped up its oil purchase programmes over the last two years to take advantage of low prices.

At a briefing in London in September, the US ratings agency Standard & Poor described China’s stockpiling plans as one of the biggest “wildcards” driving the global oil markets today. With China unwilling to provide timely accurate data of its oil stockpiling and buying patterns, traders have come to rely on estimates and a range of media reports to make decisions.

The state-owned China Securities Journal has added to the market’s foggy outlook with a recent report that Beijing is planning to build another 440 million barrels of oil storage capacity through 2020.

According to the US Energy Information Administration (EIA), China’s oil consumption will grow by an annual average 3.4% over the next two years to 11.67 million b/d in 2016, and to 12.06 million b/d in 2017. Stockpiling will account for a significant portion of this growth with imports running at more than 7.4 million b/d this year.