With a lack of comprehensive government data, China oil traders are looking for alternative sources of information.
Tracking trades Image: Sinopec |
Unlike most oil trading nations, China does not release exact data on the size of its oil supplies.
Without a clear idea of volumes, traders speculating on Chinese oil purchases are finding it difficult to assess actual demand.
While information on sales to Chinese majors, such as Sinopec and CNPC, is made public, oil ordered from on global location is divested often to smaller parties on the journey back to the mainland, making it harder still for traders to accurately monitor demand.
Large energy trading firms, like Vitol, BP and Glencore, are beginning to monitor demand in a variety of ingenious ways, including tracking the movements of tankers via satellite, and hiring port staff to provide information on where a vessel is loaded and where it offloads its oil.
"There is no substitute for having as many people on the ground as possible", says a top executive from a major energy trading desk, "we have people in big cities and will be looking to hire more."
A lack of reliable data makes China's energy market prone to speculative or irrational buying, which increases volatility in the market. For China, which offiically surpassed the US as the world's biggest oil importer in October, price fluctuations could make waves in its tightly controlled economy.
In a recent trip to Beijing, US Secretary of Energy Ernest Moniz said he would discuss the releasing oil from China's strategic reserves in detail with the nation's top leadership, with a view to maintaining stability in global oil pricing.
China is also hoping to launch an oil futures trading market in Shanghai to help it cope with volatility.