Chinese refiners processed 17.4% more crude oil last month in response to stronger demand for fuels both at home and abroad, state statistics data cited by Reuters has shown.
Domestic demand was pushed higher by the fact it is travel season, the report noted, with gasoline and jet fuel pushing the total demand higher. The report added that in barrel terms, that processing rate translated into 14.87 million barrels of crude daily, up from 12.5 million barrels daily a year earlier.
The July daily average was also higher than the June average, which stood at 14.83 million bpd, and only a bit lower than the record 14.9 million bpd in processing rates booked for March this year.
The information comes amid trader concern about China’s oil demand after the latest economic updates from Beijing. Reports of deflation led to a spike in this concern, leaving many with the impression the Chinese economy was not doing as well as expected at all.
The news about refining rates might change that but the market is currently reacting to the latest news from China, which was a surprise cut in interest rates—the second in the past three months.
“The market was expecting the PBoC to wait until September before easing again, and today’s cuts suggest that the authorities’ concern about the state of the macroeconomy is mounting,” ING regional research head Robert Carnell said in a note, as quoted by Reuters.
Meanwhile, retail sales and industrial output reports from earlier today reinforced the perception of a slowdown in the world’s largest oil importer, weighing on prices. Both industrial output and retail sales rose in July, but less than expected and less than they did in June.
“All the main activity indicators undershot consensus expectations in July, with most either stagnant or barely expanding in month on month terms,” said Capital Economics economist Julian Evans-Pritchard, as quoted by Reuters.
By Charles Kennedy for Oilprice.com