China’s implied oil demand in May topped the nine million barrel-per-day mark for the seventh month in a row, suggesting brisk demand persisted even though growth in the world’s second-largest economy is slowing.
Reuters calculations based on preliminary government data showed that last month’s oil demand, a combination of crude throughput and net imports of oil products, totalled 9.27 million bpd, a tad lower than the 9.36 million bpd in April but slightly above 9.15 million bpd in March.
The year-on-year growth rate in May slowed to 8.3 per cent, the lowest since October 2010. That was still beyond a growth rate of five to seven per cent in oil consumption suggested in a Reuters poll earlier this year.
China, which has driven global oil demand growth for the past decade, is also ahead of an International Energy Agency (IEA) forecast to account for 40 per cent of increased global crude use of 1.4 million bpd in 2011.
Chinese refineries processed 38.47 million tonnes of crude oil in May, up six per cent from a year earlier and gaining slightly from April. It was equivalent to nearly 9.06 million bpd, the third highest rate on record.
But net imports of refined oil products declined to less than 1 million tonnes last month, the lowest since November 2010, even though overseas crude oil purchases remained above five million bpd for a fifth consecutive month.
Analysts said China’s oil appetite may slow along with a moderation in economic growth, but the slowdown in oil demand growth may be milder as the country has fast-tracked stockpiling of emergency oil reserves in recent years.
China had asked its two oil majors, China National Petroleum Corp and Sinopec Group, to accelerate the expansion of commercial oil storage facilities to secure domestic supply amid fluctuations in international oil prices, Chinese media reported.
China’s economy grew 9.7 per cent in the first quarter after gaining 10.3 per cent last year, and latest data showed industrial output in May rose 13.3 per cent from a year earlier, the slowest pace since November.
Beijing has forecast its worst summer power shortfalls this year because of factors including strong demand, insufficient grid capacity and power generation losses.
A spreading power crunch would boost oil demand as industries and factories start up independent diesel-fired power generators to make up for supply shortfalls, as it happened in late last year when many provinces ordered power cuts to meet energy intensity reduction targets.
The National Development and Reform Commission has ordered bans on diesel exports to conserve domestic oil product supplies ahead of the expected summer power crunch.
