China imported far more Crude than needed in November, adding to strategic reserves and helping prevent a sharper drop in global Oil prices, though the sustainability of this trend remains uncertain, Commerzbank's FX analyst Michael Pfister notes.

China absorbs global Oil oversupply

"China once again imported significantly more Crude Oil in November than it needed for its own requirements. Comparing the data on Crude Oil processing with that on Crude Oil imports and domestic Crude Oil production, the resulting surplus amounts to 1.9 million barrels per day. This Crude Oil is likely to have been used to build up strategic reserves yet again."

"Reserve purchases were thus significantly higher than in previous months and the highest in seven months. This can be explained by the sharp rise in imports in November to their highest level in more than two years. Taking the first eleven months as a whole, reserve purchases amount to around 1 million barrels per day."

"China is thus likely to have absorbed a considerable portion of this year's oversupply and prevented a sharper decline in Oil prices. The big question, therefore, is whether China will continue to take on this role in the coming months."