BEIJING -- China's monthly crude oil imports in November hit their lowest level this year, providing more evidence that a weakening domestic economy is translating into sharply reduced oil demand.
The steep continued drop in Chinese oil use is one of the main reasons analysts are now predicting that world-wide crude consumption will decline both this year and next. The world's need for oil is ebbing so quickly that big producers from the Organization of Petroleum Exporting Countries such as Saudi Arabia and Iran may not be able to trim production fast enough, leading to an oversupply that some analysts now say could keep prices below $50 a barrel for all of next year.
[Reduced demand]
Light, sweet crude was at $44.80 a barrel midday Wednesday on the New York Mercantile Exchange, up $2.73, or 6.49%. That's more than $100 a barrel below the July peak. In November, Nymex crude fell from around $65 a barrel to finish below $50 a barrel.
Preliminary customs data on Wednesday showed China imported 13.36 million metric tons of crude in November, equivalent to 3.26 million barrels per day. That's down 17.3% from the October volumes, despite a fall in crude oil prices over the month, and 1.8% lower than the 13.61 million tons of crude shipped in at the same stage of 2007. China's crude oil exports totaled 210,000 tons in November.
Paul Ting, an oil analyst who tracks oil trends in China, said in a recent report that demand in China is now declining more swiftly than in the U.S., where oil use is falling at a pace not seen since the 1980s.
Booming demand in China, India and the Middle East have been the prime drivers in the historic run-up in oil prices over the last seven years. Slackening demand in those regions since this summer is a key force driving oil prices down.
The signs of China's slackening demand are manifold. China's refiners are scaling back operations despite the lure of abnormal margins created by a sharp fall in crude prices since July and no corresponding adjustment in state-set caps on domestic oil product prices.
Analysts say China could be taking advantage of the slide in oil prices to fill more of its strategic petroleum reserve, which would prop up crude imports, but that volumes being used for this were unlikely to offset the decline in domestic demand.
By the end of October, China National Petroleum Corp. and China Petrochemical Corp., the country's top two refiners, had built up stocks of 33.1 million barrels of gasoline and 46.8 million barrels of diesel due to slackening domestic oil demand, according to Xinhua news agency.
China's economy is dependent on exports, which fell 2.2% in November from the same month last year, according to preliminary data, the first fall since 2001. The drop has cut demand for oil, particularly in regions dependent on manufacturing goods for export to the U.S. and Europe.
October's 8.2% expansion in industrial output from a year earlier was the slowest since late 2001, according to Citigroup. Analysts said November's industrial output growth likely slowed to around 6% to 7% from a year earlier.
China has sought to boost economic growth via a 4 trillion yuan ($590 billion) stimulus package through 2010 and by loosening monetary policy. Analysts say that this could result in stronger oil-demand growth, but that it won't be felt until around the second half of next year.
In December, major refineries owned by China Petroleum & Chemical Corp., known as Sinopec, were set to cut runs by 6% from November to 12.7 million tons, or 3 million barrels a day, according to information provided by Shanghai-based CBIChina.
PetroChina Co., the listed unit of CNPC, also planned to cut runs, but not as sharply as Sinopec, said an executive with the company.
China, the world's second-biggest crude oil consumer after the U.S., has also been scaling back purchases of refined oil products from overseas. For the second consecutive month, China's oil-product imports hit their lowest level in more than two years.
Wednesday's data showed China's combined oil-product imports amounted to 1.93 million tons in November.
Nevertheless, the country remained a net importer of oil products as China exported only 1.27 million tons of oil products in November.
No comments:
Post a Comment