* Data suggests stocks fell 700,000 b/d in Q3
* Chinese strategic stockbuild is key
* Oil product stocks still growing
Global crude stocks may have fallen by almost 700,000 b/d during the third quarter, the first significant decline since mid-2011, if demand from ongoing Chinese stockbuilds is factored into market balances, the International Energy Agency said Tuesday.
China has been filling its strategic crude stocks at higher than previous rates since oil prices fell in late 2014 and the stock building has accelerated this year, according to figures implied from official import and refining throughput data.
China's strategic stocks may have grown by an average 700,000 b/d during the first half of the year taking into account official data and likely undeclared demand from Chinese independent refiners, the IEA said in its latest oil market report.
Even Chinese commercial crude stocks grew by 9.2 million barrels in August, the largest month-on-month rise recorded since early 2015, the IEA said.
Excluding demand from implied Chinese stockbuilding, the global crude market would have been almost balanced during the third quarter of 2016, the IEA said. But including the implied stockbuild in China, world crude stocks have drawn at a rate close to 700,000 b/d, the IEA said.
"The extent and duration of Chinese reserves filling may prove to be the biggest uncertainty," the IEA said. "While still an inventory build, these barrels are effectively neutralized from the market, for an emergency situation, hence can be effectively added on the demand side."
REFINING DEMAND SLOWDOWN
Early signs that crude stocks are falling outside China are visible from US and OECD Asia data. The IEA estimated that total OECD commercial inventories in August fell for the first time since March, pulled down by a 22 million barrel drop in crude stocks in the US, Japan and South Korea.
More recent US data shows an average Q3 crude stocks draw of about 300,000 b/d, while in OECD Asia the data shows recent crude stock draws of another 220,000 b/d, it said.
Looking ahead, the IEA said that given historical trends, global crude stock builds could return in the current quarter as crude demand is expected to fall by 1.5 million b/d from Q3 levels.
This year, Q4 refinery intake is expected to seasonally decline by about 1.1 million b/d, while direct crude burn for power generation will see another 300-400,000 b/d decline, it said.
"Excluding the last recession, this could be the most significant slowdown in refining activity in more than a decade, in especially stark contrast to annual gains of 1.4 million b/d and 1.7 million b/d in 2014 and 2015, respectively," the IEA said.
Although crude stocks are falling, oil product inventories remain high and continue to grow in most regions, the IEA said.
Refined product demand shows that, while refinery runs grew by 3.1 million b/d between 2013 and 2015, product demand grew by just 2 million b/d in the same period.
The difference between the two implies a cumulative global stockbuild of about 400 million barrels of products between 2013-15, it said.
