As Oil Prices Slump, China Imports Record Amount of Oil

China has not just been buying RECORD amounts of gold, it seems that China has also been gobbling up RECORD amounts of crude oil.

From Bloomberg,

China, the world’s second-biggest oil consumer, increased crude imports in May to a record high as refineries raised processing rates and oil prices declined.

The country bought a net 25.3 million metric tons, or 5.98 million barrels a day, more than it exported last month, according to data published today on the website of the Beijing- based General Administration of Customs. That compares with the previous high of 5.87 million barrels a day in February.

The jump in oil purchases helped spur a 12.7 percent gain for the nation’s imports last month, exceeding economists’ estimates. Refineries boosted processing rates last month as some facilities resumed operations after scheduled maintenance while Brent oil in London entered a so-called bear market on June 1 after sliding more than 20 percent from this year’s peak.

“International crude oil prices have been falling in the past two months, so more crude was probably shipped in to fill commercial and state emergency stockpiles” as prices could rise again, Gong Jinshuang, a Beijing-based senior engineer at China National Petroleum Corp., the nation’s biggest oil company, said by telephone.

Purchases cost an average $120 a barrel, compared with about $123 in April, Bloomberg calculations from the customs data showed. China’s imports of crude were 25.48 million tons in May, while exports were 180,000 tons

A chart of soaring oil imports from Zero Hedge who rightly points out that this means China seemingly has not been hoarding the USD

Gold and oil functions as benchmark commodities or as lead commodities.

And as I recently pointed out

It could also be possible that China’s quickening pace of gold hoarding could be as insurance against a potential cataclysmic currency crisis that could be unleashed from political responses by major central banks to avert a global recession.

Add oil to the insurance factor or “flight to real value” on the increasing risk of a crack-up boom (currency crisis)

As the great Ludwig von Mises explained

with the progress of inflation more and more people become aware of the fall in purchasing power. For those not personally engaged in business and not familiar with the conditions of the stock market, the main vehicle of saving is the accumulation of savings deposits, the purchase of bonds and life insurance. All such savings are prejudiced by inflation. Thus saving is discouraged and extravagance seems to be indicated. The ultimate reaction of the public, the "flight into real values," is a desperate attempt to salvage some debris from the ruinous breakdown. It is, viewed from the angle of capital preservation, not a remedy, but merely a poor emergency measure. It can, at best, rescue a fraction of the saver's funds.

By the way, I have been reiterating the point that financial markets will be faced with sharp volatilities in both direction but with a downside bias.

Yesterday oil spiked up on the news of Spain’s bailout, but got smashed at the end of the trading session.

Clearly boom bust dynamics at work.