Crude is trading at bargain prices these days, and the developing world is taking note. China, which has already been squirreling away oil into its strategic reserves at a record pace, is expected to continue its shopping spree in 2015. Bloomberg reports:
“Cheaper oil facilitates the building of strategic reserves,” the Paris-based IEA said on Friday in its monthly oil market report.The energy watchdog said China was “expected to again stockpile crude in 2015” as it completes new tanking capacity. Beijing in November for the first time revealed details of its oil stockpiling program, saying it held about 91 million barrels in four different locations. The U.S. holds 696 millions barrels of oil in its emergency reserve, the largest in the world.
India is getting in on the game too, securing funding to start its own strategic reserves. And at these prices, who can blame them? It’s a buyer’s market, and a great time to save for a rainy day.One possible effect of all of this stockpiling could be a rebound in the oil price. If the global economy stays sluggish, perhaps these strategic moves can give global crude demand a shot in the arm, and induce a rise in prices.