BEIJING: China's implied oil demand rose nearly 5 percent year-on-year in January, a touch below December's all-time record high, as refineries ramped up production and new processing facilities started up.
Reuters calculations, based on preliminary government data from the world's second largest oil consumer, showed implied demand was about 9.59 million barrels per day (bpd) in January, largely due to refinery production hitting an all-time high of 9.34 million bpd.
Real demand, however, could be weaker as stocks of refined oil products staged a third consecutive monthly gain by end-January and rose 14 percent from December, the official Xinhua news agency has said.
"China usually builds up fuel stockpiles in January and February. From March, fuel stocks begin to fall quickly as industrial and agricultural activities accelerate," said a Beijing-based oil analyst who asked not to be identified.
Implied oil demand is calculated by adding refinery throughput and net fuel imports, but not inventory changes. In December, implied demand was a record 9.71 million bpd.
Analysts said China's implied oil demand may fall in the second quarter of this year as economic growth weakens and refineries undergo maintenance, but demand is likely to pick up again in the third quarter.
China's economy is on course for a soft landing, a clutch of indicators showed on Friday, easing investor fears of a sharp slowdown and revealing ample room for Beijing to loosen monetary policy further to support growth.
In its February report, the International Energy Agency (IEA) revised China's oil demand growth down to 3.9 percent, or 371,000 bpd for this year, based on a GDP expansion of 8.2 percent. The IEA estimated in January China's oil demand to grow 4.3 percent, or 410,000 bpd, this year.
But even at this level, China would still account for nearly half of global incremental demand this year, the IEA said.
RECORD RUNS
For now, oil demand appears to be strong.
The record high amount of oil Chinese refiners processed in January was a 6.6 percent increase from the same month a year ago, according to Reuters calculations based on data from the National Bureau of Statistics.
The rise was largely due to state refiner Sinopec Corp and PetroChina starting a combined 360,000 bpd of new crude processing units in the last quarter of 2011, with some these units only running at full throttle from November or December.
Crude runs in February were 9.28 million bpd, the second- highest daily level after January and a 3.9 percent increase on the same month a year ago, data from the statistics bureau showed.
Refineries polled by Reuters, however, expected crude oil throughput at China's top refineries to slide to a 31-month low in March, with daily crude runs almost 10 percent lower than a month earlier, as many plants undergo maintenance -- some earlier than scheduled to trim deepening losses.
In January, gasoline demand was higher during the week-long Lunar New Year holidays, while industrial and construction activities slowed, curbing the use of diesel.
Net fuel imports fell 36.3 percent from a year earlier to 1.09 million tonnes in January, customs data showed.
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