Rory Johnston

The level of implied demand destruction that we see, and importantly here, China does not publish official demand data.

It also doesn't very importantly publish official inventory data.

So we're left kind of feeling around the shadows.

the implied demand destruction we saw through this crisis was on par, was the steepest demand destruction implied in history, and on par on the volume with the COVID zero demand shock in 2022.

But you guys were in China.

I have not seen any reporting that indicates that level

of lockdown.

So we start asking questions, OK, what's going on in the middle?

Also, when you look at, typically, you would assume that that level of demand destruction without COVID-0 lockdowns would have had to be driven by massive price increases.

But part of what also happened to this crisis is that China had basically throttled the ability of domestic retail prices through their normal regulatory procedures

Prices of petrol in Beijing only rose maybe 30% versus the doubling we saw globally.

So again, it just doesn't track for me that all of that or even most of that was demand destruction.

So then we go to this point about substitution or outright releases of strategic petroleum reserves.

Now, the one thing we can say is that the inventories we can see, these are the floating roof storage tanks for crude oil.

Those are still very, very high and roughly where they stood at the beginning of this crisis.

So as far as we can tell, they're not drawing down aggressively on those stocks, at least not yet.

The caveat there is that we can't see, through those satellite analyses, we can't see underground storage tank, underground storage caverns and their proper SPR.

They have six storage caverns, at least that we know of, about 131 million barrels.

The likelihood is that they have been drawing down those because the following crude oil imports

fell far faster than the decline in refining run rates.