Chinese oil imports fall in June

China's crude oil imports fell to about 9.77 million barrels a day last month, a 2 percent decrease from May and the lowest monthly figure since the beginning of the year, Reuters reported, citing customs data. In the first half of the year, China imported 260.66 million tons of crude oil, 3 percent less than in the first half of 2020. The first half was boosted by increased imports from independent refineries, commonly known as "teapots". However, since the first quarter, Beijing has started cracking down on the teapots as fuel production by both independent refineries and large state-owned companies grew faster than demand, undermining refining margins and causing a flood. Beijing stepped in and asked the state oil companies to stop trading their crude oil import quotas with private refineries. The government also cut the second series of crude oil import quotas for private refineries by 35 percent last month to a total of 35.24 million tons. This intervention suggests that imports could remain subdued for the next few months, mainly because of higher prices. According to a previous OilX report, China appears to have enough oil in its reservoirs to draw from. The energy analysis firm said that based on satellite data, China's crude oil inventories have fallen from 436 million tons in April to 414 million barrels at the end of June. The news of falling imports, however, will have its own effect on prices, likely a negative one as concerns about the latest variant of the coronavirus appear to be mounting and weighing on oil prices. On the flip side, OPEC is still trying to reach an agreement on production adjustments, adding to price volatility. That volatility could stay elevated until last month, JP Morgan said earlier this week as the cartel struggles to bring the UAE back into line.