Several sources I talk to in Asia tell me that China is now buying oil like crazy!
The reasons …
1. The Olympics are just around the corner and Beijing does not want an estimated 10 million tourists and athletes from all over the world to put up with brownouts.
2. The recent earthquake. In no way does Beijing want its citizens to suffer from high oil and gas prices or brownouts this summer, especially in the aftermath of the earthquake that sadly took nearly 70,000 lives, including more than 9,000 children, and displaced five million people.
The rural countryside is already angry with Beijing on the lax building code enforcement and building cronyism. The last thing Beijing wants is an uprising on energy prices.
3. China’s strategic oil reserves are now being filled, with an aim toward storing at least 30 days worth of oil imports, or roughly 292 million barrels of oil.
The key question: How does China get the oil to fill up these huge storage tanks?
By buying it, of course. By going into the open market and bidding for oil aggressively. I suspect that’s the hidden force that’s been helping to propel oil sharply higher … and will continue to do so.
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