At the eighth Leaders Summit of the Group of Twenty（G20） recently held in Australia， China announced that it would regularly release its petroleum inventory data.

As the worlds largest oil importer， Chinas current dependence on foreign petroleum is as high as 60%. Therefore， its self-evident that the move will have a great impact on the international petroleum pricing and trading.

Chinas regular petroleum inventory data， which cover data on the countrys strategic crude oil reserve and commercial reserve， as well as inventory data on refined oil， fuel oil and others， will offer futures traders an important trading guideline， according to Gao Jian， an analyst at Zhuochuang Information.

Guideline to petroleum futures trading

According to a recent World Energy Outlook report re-leased by the International Energy Agency， China will overtake the United States as the worlds largest oil user around 2030 before its demand for oil grows to its peak at a slow rate.

Currently， most of the major countries across the world have oil inventory data open to public. It is of great significance for China， one of the worlds major oil importers and consumers， to regularly disclose the inventory data.

“Chinas move to regularly disclose its oil inventory data will offer an important trading guideline to futures trades in the international market，” Gao says.“Futures trades， who focused on the U.S. market as China kept the inventory data undisclosed， will pay close attention to the disclosure.”

With an important position in the international oil market， Chinas every move in the oil market will be a focus of attention.

Industry insiders believe that if the data keep undisclosed， it will entail erratic fluctuation of market prices， as they are very important to the oil pricing and trading.

“Oil inventories have a connection with the supply and demand. An increase in inventories shows a low level of demand or a rise in supply， which will send oil prices down，” Gao says，

On the contrary， a decline in inventories indicates high demand or decreased supply， which will push up the oil prices. In a word， an increase or decrease in inventories has a negative correlation with supply and demand.

Gao also cautions against looking at the role of the oil inventory data too simplistically in view of the above-mentioned connection.

As changes in Chinas oil inventories have more and more influence on word oil prices， regular disclosure will increase demand transparency， which is viewed as one of reform measures by China， the worlds second largest economy， and a new contribution to build an open world economy，” says Wang Tao， chief China economist at UBS Securities

Inadequate infrastructure for oil reserves

China has lowered domestic refined oil prices eight times by far.

“We are taking advantage of the low price to expand oil imports， leading to a rise in inventories. From data on inventories and crude oil imports， we can see the domestic demand for oil growing.” says Gao.

According to a recent report released by the Organization of Petroleum Exporting Countries， Chinas strategic oil inventories rose by 35 million barrels in the three months ended October.

From July to September， Chinas crude oil imports grew by 2%， 6.1% and 2% respectively， on a month-to-month basis， while in October， Chinas crude oil imports fell to 24.09 million tons， down more than 15.4% from September， but up 18% from a year earlier， according to the Chinese customs administration data.

The increased oil imports are not always used for strategic oil reserves， many of which are for commercial reserves as a result of enterprises behaviors under the market economy， says Dong Xiucheng， professor at the Institute of Business Administration， China University of Petroleum.

Chinas current strategic crude oil reserves are equivalent to the 70-day supply of the commodity for the nation， mainly due to inadequate infrastructure for crude oil reserves in the country， according to Dong.

After 11 years of efforts， China has completed the construction of the first four state strategic oil reserve bases， all of which have been put into operation with the total capacity of 103 million barrels.

By 2020， the total capacity of Chinas strategic oil reserve bases will reach 503 million barrels， equivalent to a 90-day supply. By 2030， the reserves will be enough to supply the nation for 120 days.

However， Chinas current strategic oil reserve capacity is well below those of the United States and Japan which reach 1 billion barrels and 315 million barrels， respectively，

Even its reserve capacity of 503 million barrels by 2020 is dwarfed by United States current capacity of 1 billion barrels， indicating China still has a long way to go.