China Might Add to the Strategic Oil Reserve

Saturday, October 10, 2009

In a rare public statement last week from China's top energy official, Zhang Guobao, head of the National Energy Administration, in the People's Daily newspaper that China should take advantage of the falling global energy demand to increase the strategic oil reserve.

This news have been circulating for a while now and might be a major bullish factor going forward. Because of the Middle East chaos and the OPEC's plan to cut production, international oil prices have been rising lately. On Jan. 2, oil closed up 3.9% to $46.34 a barrel on the New York Mercantile Exchange. An energy expert has suggested that at this price China should speed up its oil reserves, said xinhuanet.com today.

Guan Qingyou, an energy expert from Tsinghua University in Beijing, said that $46 is a relatively low price and offers a good opportunity to accelerate filling up China's oil reserves. He explained that the global economy will not warm up soon and the global oil, whose demand is decided by the world economy, will not see its prices rise up in the short term.

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