China’s implied oil demand rose 1.1 percent in June from a year earlier, the slowest growth in oil demand in more than two years, according to a Reuters report.
Oil plants in the country are undergoing heavy maintenance amid poor refining margins and Beijing’s tightening monetary policy cut into oil use.
But analysts said real oil use may not be as bearish as the figures show, as oil firms may have been drawing on oil inventories, which were not reported by the government, to ease the pain of negative refining margins.
If Beijing continues its persistent battle against inflation, oil demand in the world’s second-largest consumer could grow slower than the pace of 5 to 7% forecast early in the year. Concerns remain in Beijing about over inflated asset prices and the sttep rise in the costs of raw materials and foodstuffs.
“With China’s monetary tightening close to an end and car sales growth also resuming, China’s oil demand growth will track economic growth higher in the months ahead,” Gordon Kwan, head of energy research at Mirae Asset Securities in Hong Kong, told Reuters.
Implied demand, crude oil throughput plus net imports of refined oil products, averaged 8.97 million barrels per day (bpd) last month, down 3.2 percent from May, and slipped below the 9 million bpd mark for the first time in 8 months, according to Reuters calculations based on preliminary official data.
“While worries of a slowdown exist, I believe the domestic demand for refined products will remain steady in light of the strong official economic statistics,” Priya Narain Balchandani, oil products analyst at Standard Chartered Bank told Reuters.
