Last month, the World Bank slashed its forecast for China’s economic growth to 7.4% in 2014 and to slightly above 7% in 2015 and 2016. These numbers are significantly down from its previous forecasts for the Chinese economy to grow by 7.6% for 2014 and 7.5% for 2015.

Traders and the International Energy Agency (IEA) believe oil prices could fall further after crashing last week to their lowest levels in four years with Brent crude selling for just over US$77 a barrel and US WTI going under US$75.

Chinese buying to build inventory has been cited as a key reason for oil prices holding above US$100 a barrel for the first half of the year.

Traders estimate Chinese state-owned firms bought a record of 20 to 25 million barrels of mostly Middle Eastern crude in October. Most of the cargoes have been put into storage at the country’s expanded strategic stockpiling bases, which Beijing is targeting to meet the equivalent of 100 days of imports, or about 650 to 700 million barrels, by 2020. The state-owned tanks are believed to hold at least 140 million barrels now, with private companies holding an unknown quantity.

But their buying spree could be slowing down amid the growing bearish outlook on the oil markets and the

Chinese economy. China’s domestic oil demand growth has slowed sharply, to just 1.8% for the first nine months this year over the same period last year. However, its imports have surged by more than 8% year-on-year, implying that most of the purchases have gone into stockbuilding.

The IEA took note of China’s active stockbuilding activities in its April report on the global markets when it said the country’s crude import reached a record high 6.81 million b/d for the month.

Amid “an unprecedented crude stock build of 1.4 million b/d” in April, the IEA said China might have begun filling a recently completed expansion of its strategic petroleum reserve facilities, and help support crude prices staying above US$100 a barrel.

“How Chinese importers plan to use those barrels remains an open question. Reports of Chinese budget allocations to expand strategic reserves suggest that the oil is going into storage, a view backed by the fact that some of the Chinese ports where crude imports rose the most border the new strategic facilities in Tianjin and Huangdao,” it said.

Taking a medium-term view, the IEA said it expects China’s oil demand to rise to 12 million b/d in 2018 from 9.84 million b/d in 2009 and 4.6 million b/d in 2000.

The country’s domestic crude production is expected to rise from 4.13 million b/d in 2012 to 4.4 million b/d, far from sufficient to meet the growth ind omestic demand. As such, China’s dependence on oil imports is expected to surge

The EIA said the Chinese government has committed to building storage facilities to hold 500 million barrels of strategic petroleum reserves (SPR) by 2020. The project is being implemented in three phases, starting with four storage facilities completed by 2010 to hold 103 million barrels of crude oil.

Citing China National Petroleum Corp’s 2011 yearbook, the IEA said China plans to build another 207 million barrels in eight locations under the SPR’s second phase.

“However, as the government treats the SPR as a state secret, information on capacity increases and stock levels remains elusive. According to public information, it is likely that the second phase will include more than 207 million barrels of storage capacity. Although completion of the second phase was forecast for the end of 2013, it appears that it has been delayed until 2015.”

In the current third phase, the IEA believes Beijing plans to build between 150 million and 200 million barrels of new capacity, thus raising the nation’s state-owned strategic reserves to 500 million barrels by 2020. Construction of the sites under SPR3 has not started, said the IEA.

At the same time, Beijing is also encouraging domestic private companies to develop and operate their own commercial reserves to help meet China’s fast-growing domestic oil demand.

Chinese refiners are expected to add some four million b/d of capacity by 2018, raising demand for storage terminals to handle both crude and refined products.

The IEA said it does not have clear information about China’s total commercial inventory level as there is “an unclear distinction between SPR sites and commercial storage.”