Weekly China LNG and oil inventory drawdowns send a bullish signal

One way to measure the vigor of an economy is whether inventories are piling up or being drawn down; these supply and demand signals apply to energy as much as any other good.

In China, inventories for liquefied natural gas and crude oil are pointing to stable industrial demand in the current quarter, according to high-frequency indicators sourced by Shandong Longzhong, a leading consultancy.

Weekly data shows that inventories of LNG at Chinese factories are continuing their months-long downward trend. This applies to both domestically produced and imported LNG.

Imported LNG inventories - the key metric to monitor, as China is the world's largest LNG importer - fell to 2.9 million tons as of April 25. That marks a 35% decline since mid-November 2024, when they reached a peak of 4.5 million tons.

Domestic LNG inventories declined about 23% to 521,000 tons by the end of April, down from 665,000 in early December.

Crude oil inventories at Chinese ports, meanwhile, have exhibited a rather stable trend since early 2022, holding at about 27-28 million tons. (The glut caused by pandemic-era disruptions can be seen on the left-hand side of our chart.)

The figures paint a bullish picture for the Chinese economy more broadly, which expanded at a better-than-forecast 5.4% year-on-year pace in the first quarter of this year.

Our subsequent charts explore how these datasets can be broken down by region and for individual ports. (An inventory turnaround for LNG appears to have been particularly pronounced in southern China, for instance, with supplies getting much tighter in mid-2023. For crude oil, the southern and Shandong regions had the highest inventories relative to their norm.)