China’s Oil Demand Rises (Upstream)

From: Upstream

China’s implied oil demand rose 4.9% in February from a year ago to the fourth highest level on record despite a holiday lull that pulled apparent consumption down from the third-highest posting on record in January.

China consumed roughly 10.14 million barrels per day of oil last month, according to Reuters’ calculations based on preliminary government data.

February’s growth rate, however, was the slowest since September, partly because of a high base a year ago, when demand hit its second-highest on record to that point.

Fuel demand in China, a key driver for global oil markets for more than a decade, rose at its slowest rate in four years in 2012 as the world’s second-largest economy expanded less rapidly. Demand started to recover modestly from late last year amid signs of the economy regaining strength.

Implied, or apparent demand, is a combination of crude processed and net imports of refined products. It ignores inventory changes, which are rarely disclosed by the government, according to Reuters.

Weaker February demand was also in part due to a nearly 34% fall year-on-year in net fuel imports to about 295,000 bpd, as oil companies shipped surplus fuels, mainly diesel, overseas as domestic supply outpaced demand.

“Chinese refiners likely continued to export gasoline and diesel as the fuel market remained well supplied during the holiday season,” wrote Cheng Sijing, commodities analyst with Barclays, in a clients’ note on Friday.

On a daily basis, China’s crude throughput rose 6% last month versus a year earlier to 9.84 million bpd, data from the National Statistical Bureau showed, as major oil companies Sinopecand PetroChina operated new refineries at high rates amid steady margins, despite easing demand as factories shut for up to two weeks for the Lunar New Year holiday.

Consumptions in January rose 8.6% on the year to about 10.43 million bpd — the highest after December’s 10.9 million bpd and November’s 10.5 million bpd — as oil companies replenished stocks ahead of the Lunar New Year break, Reuters reported.

The higher January demand was supported by hefty refinery throughput at 10.1 million bpd — a touch below the all-time high at 10.15 million bpd in December — which was 8.1% above a year earlier.

On the macroeconomic front, data released since Friday has pointed to an uneven recovery in the world’s second biggest economy after its slowest year of growth since 1999.

China’s exports in the first two months of the year rose a robust 23.6% versus a year earlier, but imports were much weaker than expected.

Industrial output growth, also a good indicator of oil demand, eased 9.9% in the first two months from a year earlier ago, below market forecasts.

Chinese oil demand grew 4.2% in 2012, or at about 387,000 bpd, according to Reuters’ calculations based on final government figures. That’s down from a 6.3% growth rate in 2011 and blistering double-digit growth in 2010

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