It’s a very bad time to be in the business of selling oil, but buyers are having a field day. With the price for a barrel of oil less than half of what it was in June of last year, net crude importers are busy reaping the benefits of the bear market. China was already squirreling away oil into its strategic reserves at a record pace in June, when oil was trading above $110 per barrel. Now, with that same crude hovering at and below $50 per barrel, it’s stockpiling at an even faster pace. Reuters reports:
Tumbling world oil prices sparked a buying spree by China that led to record crude imports in December, according to Reuters estimates that suggest the top energy consumer doubled the oil put aside for strategic reserves in 2014 compared with 2013. […]Estimates by Thomson Reuters Oil Research and Forecasts indicate that China’s total crude imports surpassed 31 million tonnes, or more than 7 million barrels per day (bpd), for the first time last month. That’s more than 10 percent above the previous record monthly amount.
China isn’t the only Asian power making hay while the sun shines, either. Japan, long a heavy importer of energy and recently more reliant than ever on foreign sources following the Fukushima disaster and subsequent shutdown of the country’s nuclear reactors, is capitalizing on cheap oil and seeing a boost to its economy. The WSJ reports:
[M]any Japanese executives said the oil-price decline would lift consumer-spending power and corporate profits. That, they said, could reinvigorate Prime Minister Shinzo Abe ’s economic-turnaround program, after a sales-tax increase in the country last April tipped Japan into recession.“It is enormously positive for the Japanese economy,” said Takashi Hibino , president ofDaiwa Securities Group Inc., speaking at a traditional New Year’s reception hosted by business lobbying groups. “There are no negatives for our economy.”
True, the oil price plunge has created a host of new losers as oil producers struggle to balance budgets and profitably operate, but it’s also been a shot in the arm for the rest of the global economy that relies on oil as an input. Not being particularly blessed with crude itself, Asia stands firmly on the winning side of this ongoing price slide.