China oil demand slowest this year

Implied oil demand in China slipped to the lowest level this year due to plant maintenance and accidents which resulted in lower refinery output. But on a year-on-year basis, implied oil demand went up by 7.8%. China is the world’s No. 2 fuel consumer but figures show that fuel consumption has been declining since May. This was attributed to rising crude costs which have squeezed refining margins and Beijing’s credit tightening measures which led to a decrease in fuel spending. Despite the slow growth, the International Energy Agency (IEA) estimates that China still makes up around 46% of the world’s incremental oil demand this year. Excluding inventory changes made by the Chinese government, implied demand or crude throughput plus net imports of refined oil products reached about 8.94 million barrels per day (bpd), up by 7.8% from August 2010, before it dipped to the lowest rate this year.
Chinese demand for oil expected to rise
Dalian Petrochemical Corp., the largest plant owned by PetroChina, had to shut down its 200,000 bpd crude unit in mid-July after a fire. It resumed operations by the end of August, but a diesel tank caught fire in the same plant in late August. As plants wind up maintenance and with several new refining facilities starting on line, industry officials expect that demand will remain steady or pick up in the coming months. PetroChina has bought 60,000 tons of diesel fuel for September after shying away from the Asian diesel market for most of the year. As the fishing ban ends and the autumn harvest begins, demand for fuel in the country is expected to rise. Builders also resume normal construction work after the rainy season, and this is expected to contribute to increased fuel consumption. (September 10, 2011)