BEIJING (Reuters) - China’s implied oil consumption grew 2.5 percent in 2015 on strong gasoline and kerosene use, defying a slowing economy and falling demand for other commodities such as coal and steel.
Yet oil demand growth in 2016 is seen lower as the world’s second-largest economy is locked in a protracted slowdown.
China consumed a record 10.32 million barrels per day (bpd) of oil in 2015, up 256,000 bpd on the year, according to preliminary Reuters calculations based on government data.
China’s strong demand, especially for crude and gasoline, has been a rare pillar of support for oil prices, which have tumbled over 70 percent since mid-2014 to their lowest in more than 12 years, as global exporters pump a million barrels of crude a day in excess of demand. [O/R]
China’s oil demand should continue to support global oil prices despite overall bearish sentiment, said analyst Daniel Ang of Phillip Futures in Singapore.
“Just looking at oil demand alone for China, it’s likely to remain strong or at least grow at the same pace as it has been,” he said.
Still, with China’s economy growing last year at its slowest pace in 25 years and economists expecting it to lose more momentum in 2016, many analysts see the country’s oil demand growth dropping off as well.
Chinese oil demand is expected to grow 420,000 bpd in 2016, compared to an estimated 600,000 bpd last year, according to Standard Chartered, with the International Energy Agency forecasting a similar drop in its most recent monthly report.
Some fall-off in oil demand has already been seen over the last two months, with implied oil use down more than 1 percent from a year ago in both December and November.
Reuters calculates preliminary implied oil demand using official figures for refinery throughput and net imports of refined products, excluding any changes in inventories.
More detailed demand calculations for December, with a breakdown by product, are expected later this week. Demand adjusted for estimated changes in commercial fuel stocks will come later in January.
China’s oil demand has so far been propped up by vehicle sales that rebounded thanks to tax breaks in the second half of last year after growth earlier ground to a halt.
And vehicle sales are expected to grow even faster at 6 percent in 2016, the China Association of Automobile Manufacturers said earlier this month.
Over January-November for 2015 - the latest period for which detailed demand calculations are available - gasoline use rose 9.7 percent, mostly due to the increase in passenger car sales.
But China is also exporting increasing amounts of refined fuel.
“This will be a result of slower domestic demand growth and a growing refining capacity surplus, which will encourage refiners to turn to overseas markets,” said forecaster and data analysis company BMI Research.
In 2015, China continued to refine more crude oil - a record amount in December - as imports of crude oil continued to grow amid global prices less than half the previous year’s highs.
China imported a record 7.82 million bpd of crude last month to feed its growing throughput capacity and help fill strategic reserves.
China’s refinery runs for 2015 rose 3.8 percent to 10.44 mln bpd, data from the National Bureau of Statistics (NBS) showed.
In December, refinery throughput hit a record 10.79 million bpd, up 2.7 percent from the same month last year and 1 percent higher from November.
High crude throughput and weak domestic demand growth for diesel made China a net fuel exporter in 2015. The country exported 120,000 bpd of fuel.
Editing by Henning Gloystein and Tom Hogue