China oil demand hits 17 million tonnes

China’s implied oil demand rose in June to its highest level since January 2013 as crude runs hit a record high. Analysts remain cautious about the broad economic outlook in the world’s second largest oil consumer, noting that faster-than-expected growth in the second quarter was driven more by government support than by genuine momentum. The record-high refinery throughput in June did not convince analysts a robust recovery was under way.

The International Energy Agency (IEA) revised down this month its forecast for China’s oil demand for 2014 on lower estimates of industrial fuel use, predicting implied oil demand would rise just 3.3 percent for the year. The IEA also lowered its estimate for consumption growth in diesel and heavy gas oils by 55,000 bpd.

China imported 5.66 million bpd of crude oil in June, down 7.8 percent from May. Crude imports for the first half of the year rose 10.2 percent to 6.13 million bpd compared with the same period last year.

China consumed roughly 10.2 million barrels per day (bpd) of oil last month, the highest level in 17 months and up 8.4 percent from May. June oil consumption was up 2.6 percent from a year earlier.

China’s daily crude throughput in June rose 7 percent from the previous month to a record-high 41.83 million tonnes, or 10.18 million bpd, as refineries emerged from the peak maintenance season in April and May.

China’s economic growth in the second quarter quickened to 7.5 percent as a burst of government stimulus paid dividends, but analysts said Beijing will likely need to offer further support to meet its growth target for 2014.

The strong demand for gasoline compares with weak demand for diesel, which is used in everything from power generators and factories to trains and usually has a stronger correlation to economic growth.

Even with the driving boom, implied oil demand in the first half of the year inched up only 0.5 percent to 9.87 million bpd from a year ago.