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China implied oil demand falls.

China's implied oil demand rose 3.2 per cent in April from a year earlier, but consumption was the lowest in eight months as refineries scaled back production for maintenance and continued to export surplus refined fuel to trim inventories.

Official data released, including weaker-than-expected factory output growth, suggested that the recovery of the world's second-largest economy and oil user remained fragile.

Fuel demand in China, a key driver for global oil markets, climbed at its slowest rate in four years in 2012 as the economy expanded less rapidly. But consumption started to pick up modestly from late last year amid signs economic growth was regaining some strength.

China consumed roughly 9.6 million barrels per day (mbpd) of oil last month, according to calculations based on preliminary government data. That was up from the 9.3 mbpd level in April 2012, when demand fell for the first time in three years due to a cooling economy and high oil prices.

"Oil demand recovery was delayed to May partly because spring plough and infrastructure construction in Northeast China didn't start until the end of April due to colder than usual weather," said a Beijing-based oil analyst with an investment bank.

The April level slipped from 9.72 mbpd in March, as refineries operated at the lowest daily rate since September 2012, according to data from the National Statistical Bureau. Oil majors kicked off their refinery maintenance season last month, shutting down at least three crude units with total processing capacity of 270,000 bpd. Sinopec shut crude units at Qilu and Shijiazhuang, while PetroChina shut a crude unit at its Dalian refinery.

Refinery throughput in the first four months gained 3.2 per cent on year to about 9.65 mbpd, according to NSB.

Demand is likely to gain some momentum in the coming months, as fuel stocks were trimmed after months of destocking and fuel consumption from summer driving and infrastructure projects is expected to rise. Implied demand is calculated by adding crude oil throughput and net imports of refined oil products but excludes stockpile changes, which are seldom disclosed by the government.

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Publication:Oil & Gas News
Geographic Code:9CHIN
Date:May 20, 2013
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