Tracking the Coronavirus — Part One: Chinese Energy Trends

In a multi-part series, Orbital Insight brings you on-the-ground truth on how businesses, industries, and markets across the world are impacted by the coronavirus contagion.

Orbital Insight GO Shows Chinese Oil Build Less than What Media Would Suggest

Since we woke up to the sheer disruption of life and travel in China from the coronavirus, the one question that remains unsatisfactorily answered is what is the actual impact on energy from the pandemic.

Wall Street analysts and energy media services have been quick to estimate that lost consumption of fuel in China alone could run into hundreds of thousands of barrels daily. The Paris-based International Energy Agency forecasts that global demand for crude as a whole will drop 435,000 barrels daily this quarter, versus the opening quarter of 2019. The U.S. Energy Information Administration, meanwhile, believes that worldwide demand for oil will fall by 310,000 barrels daily for all of 2020.

But none of these numbers shed light on where crude inventories stand in China — a great indicator on how many barrels per day the world's largest energy-consuming country was still consuming amid the crisis. The market's urgency in understanding this cannot be understated, given that the next official monthly data on Chinese oil imports won't be available until early March.

For Orbital Insight clients, however, transparency on Chinese crude stockpiles have been assured from Day One and throughout the viral outbreak, thanks to our geospatial analytics. Covering more than 25,000 floating roof tanks indicative of over six billion barrels of global storage capacity, Orbital also captures oil inventories in the OPEC and OECD countries, in India and elsewhere to give users comparison and greater perspective.

By adding satellite computer vision and AIS shipping tracking data to our looking at geolocation tracking, we have been able to gain ever-sharper visibility on the goings-on in the Chinese petroleum industry.

For this Coronavirus series, we present GO's latest snapshot on the Chinese oil stockpile situation. And the numbers are below levels predicted by the media's portrayal of country-wide demand in China.

Orbital Insight Chinese Oil Data
Above: Orbital Insight tracks floating roof storage across China and Shandong Province.

Our data shows that Chinese inventories have built 6.3 million barrels in the past seven days, compared to the nearly 12 million barrels over the previous 30 days. Year-on-year growth in Chinese stockpiles was just at 3.43 million barrels — a modest comparison due to the country's significant stockpiling activity last year. OPEC, on the other hand, carries a 25mm YoY surplus.

Orbital Insight Oil Data

The numbers show that Chinese builds are below what media reporting on demand destruction would suggest.

Traffic in the Port of Shanghai

Orbital Insight Port of Shanghai
Above: Orbital Insight Geofence of the Port of Shanghai for AIS Monitoring.

AIS data is the automatic tracking system using transponders on ships. While its primary purpose is to supplement marine radar and prevent vessel collision, it can provide valuable intelligence on commodity shipments.

The Port of Shanghai, the world's busiest container port, saw a dramatic decrease in total vessel traffic during the Lunar New Year. AIS data can quantify the seasonality of this trend as well as the return to normal patterns. On Lunar New Year of both years, vessel traffic decreased to approximately 2,500 ships. However, 19 days later in 2019 traffic returned to a normal pattern of approximately 7,300 daily ships. In 2020, over the same time period, it only reached 3,500 ships.

Orbital Insight AIS Data
Above: Orbital Insight uses AIS data to quantify total vessel traffic in the Port of Shanghai.

Orbital Insight was able to extract further patterns of vessel traffic in the Port of Shanghai by segmenting the trend by cargo ships and tankers.

Orbital Insight AIS Data
Above: Orbital Insight uses AIS data to quantify daily cargo ship and tanker traffic in the Port of Shanghai.

Combining with Other Data Sources

The media has reported that Chinese refineries were throttling back production of fuel products to cope with weak demand a lack of workers due to the Coronavirus. Bloomberg, for instance, reported on February 19 that Chinese refineries were processing 25% less oil than a year ago.

In another report on Feb. 14 Bloomberg said after weeks of production cuts, cargo deferrals and cancellations, non-state-owned refiners in China's run rates have fallen to about 10 million barrels daily, the least since 2014, down from 11.4 million barrels a day earlier this month and an average of more than 13 million barrels last year, Bloomberg reported.

The GO data on Chinese stockpiles also indicates that media reports of Chinese refineries having ramped up crude buying have not borne out yet.

This is particularly important as Bloomberg in another report on Feb. 14 said after weeks of production cuts, cargo deferrals and cancellations, non-state-owned refiners in China's eastern Shandong province have begun snapping up crude that became too cheap to ignore.

Monitoring the Situation

Orbital Insight is actively working with its clients to meet the surge in demand for data around the economic impact of the coronavirus. We will be providing insights on our blog for best practices of using GO to track fuel demand indicators, supply chain activity, tourism trends as well as critical data that can be used by public health officials that can help slow the spread of the virus.

Our assertion is that GO enables analysts and government officials combine geospatial data with traditional sources of intelligence to obtain a comprehensive, multi-perspective view of the subject at hand.

Stay tuned for more examples demonstrating how geospatial analytics can quantify the shutdowns and recovery of assets such as auto plants, airports, ports, and retail centers.

About GO: GO allows users to create quick, accurate, and efficient data to monitor retail, infrastructure, and manufacturing projects within hours. The geospatial analytics platform tracks commodity flows, plant disruptions, traffic patterns and more while showing customers how to connect the dots and trace a moving supply chain.

About Orbital Insight's Floating Roof Tank capabilities: Orbital Insight scans the Earth's landmass daily to locate and calculate oil inventories, sourced from thousands of daily satellite observations of the world's above-ground oil floating roof tank storage (FRTs). The product leverages multiple sources of geospatial intelligence, including Electro-Optical and Synthetic Aperture Radar (SAR) imagery to create an objective, transparent and timely calculations of oil storage on a daily basis.