China oil demand hits highest in 17 mths, still doubts on strength
Source: www.chinamining.org Citation: Reuters Date: July 17, 2014
China`s implied oil demand rose in June to its highest level since January 2013 as crude runs hit a record high, although there were still doubts that the numbers reflected a healthy economy.
Analysts remain cautious about the broad economic outlook in the world`s second largest oil consumer, noting that faster-than-expected growth in the second quarter was driven more by government support than by genuine momentum.
China consumed roughly 10.2 million barrels per day (bpd) of oil last month, according to Reuters calculations based on preliminary government data, the highest level in 17 months and up 8.4 percent from May.
The record-high refinery throughput in June did not convince analysts a robust recovery was under way.
"I don`t think that should be a cause to celebrate from an economic activity perspective," said Simon Powell, head of Asian oil and gas research for CLSA in Hong Kong.
"It`s China`s car owners that are keeping demand growing."
The strong demand for gasoline compares with weak demand for diesel, which is used in everything from power generators and factories to trains and usually has a stronger correlation to economic growth.
Even with the driving boom, implied oil demand in the first half of the year inched up only 0.5 percent to 9.87 million bpd from a year ago, according to Reuters calculations.
June oil consumption was up 2.6 percent from a year earlier, the calculations showed.
China`s economic growth in the second quarter quickened to 7.5 percent as a burst of government stimulus paid dividends, but analysts said Beijing will likely need to offer further support to meet its growth target for 2014.
IEA LOWERS FORECAST
The International Energy Agency (IEA) revised down this month its forecast for China`s oil demand for 2014 on lower estimates of industrial fuel use, predicting implied oil demand would rise just 3.3 percent for the year.
The IEA also lowered its estimate for consumption growth in diesel and heavy gas oils by 55,000 bpd.
"I think the implications are that the Chinese economy isn`t growing as fast as people say it is," said Powell of CLSA, adding that he expects China`s oil growth to fall short of the IEA forecast.
Reuters calculates implied oil demand using official refinery throughput data plus net imports of the main refined products, excluding changes in fuel stocks, which China rarely reports.
China`s daily crude throughput in June rose 7 percent from the previous month to a record-high 41.83 million tonnes, or 10.18 million bpd, as refineries emerged from the peak maintenance season in April and May, data from the National Bureau of Statistics (NBS) showed.
Crude throughput was up 5.8 percent from a year ago, the statistics bureau data also showed. Analysts cite an increase in refining capacity as one reason for the growing crude runs.
China has begun exporting more refined fuels, but became a net fuel importer again in June.
Net fuel imports in June were 110,000 tonnes, or 25,667 bpd, compared to net exports of 410,000 tonnes in May and 1.29 million tonnes a year earlier, customs data showed earlier.
China imported 5.66 million bpd of crude oil in June, down 7.8 percent from May. Crude imports for the first half of the year rose 10.2 percent to 6.13 million bpd compared with the same period last year.
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