More demand for oil: in China
China increases appetite for oil
China's apparent oil demand rose 2.9% in August from a year earlier, the fifth consecutive rise, as refiners kept production at robust rates and proactive economic policies continue to propel industrial activities.
The August rate, on a high base a year earlier when implied oil demand jumped 7%, offers fresh evidence that fuel demand in the world's second-largest energy-consuming country is recovering further.
China used 7.71 million barrels per day of oil in August, Reuters calculations based on official data showed today, 437,000 bpd or 5.4% less than July.
"I think independent stock-building to beat official price rise in the second half of last month helped a lot in driving up apparent oil demand," said Wu Penghai, a Shanghai-based oil analyst from Cargil.
Beijing postponed the long-awaited price hike by a week, increasing fuel prices by 4% to 5% on 1 September.
Hefty production also helped bring up the implied oil demand. China's August refinery crude throughput rose 9% from a year earlier to 7.67 million barrels per day after hitting a record high of 7.8 million bpd in July.
China has been reiterating that it would keep the proactive fiscal policies and accomodative monetary polices in place to ensure the economic recovery to be on a solid footing.
Consistent policy outlook sends positive messages to oil analysts, who believe that oil demand will rise further for the rest of the year as Chinese factories keep getting up steam.
"We are more bullish on China oil demand due to the strong economic rebound following the fiscal stimulus. We believe the stimulus will remain in place for the rest of this year and result in sustained oil demand growth of 12% year on year in 2H 2009," according to a note from Bernstein Research.
China's vast manufacturing sector, as measured by the purchasing managers' index (PMI), kept up its steady recovery to rise to a 16-month high in August as output, new orders, imports and employment all showed strength.
Soaring automobile sales also ensure many of a quick oil demand rise in the future.
China's passenger cars sales in August rose 90.18% from a year earlier, thanks to Beijing's incentive policies such as tax cuts.
"As disposable income per capita continues to rise on the back of economic growth, demand for increased mobility will drive demand for crude and oil products," says the note.
It estimated that China's total motor vehicle number will increase from 80 million to 220 million by 2020 to reach a similar level to that of the current US.
A remarkable drop in fuel stock last month might make the oil demand growth more prominent as the data stripped out changes in refined fuel inventories.
Fuel stocks held by China's top two oil companies fell for the first time in four months in August.
Inventories of gasoline, diesel and kerosene held by CNPC and Sinopec Group dropped 7.4% in August over July as domestic sales increased 8.1%, an industry official with knowledge of the data told Reuters early this month, reported Reuters.