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Weak demand drives China's Nov. crude imports to year's lowest level
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16:53, December 24, 2008

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Although crude oil imports were at their year's lowest point in November, Guo Haitao, assistant to the head of the China Research Center of Energy Strategy, said on Wednesday that state oil reserves remain high.

China imported 13.36 million tons of crude last month, down 1.86 percent year-on-year and down 17.3 percent month-on-month, as a weakening global economy cut domestic demand -- especially from industry.

Market observers said the decline was larger than expected, since many had thought the government would have taken advantage of low world oil prices to increase reserves. Oil prices have fallen more than 100 U.S. dollars per barrel since peaking earlier this year.

They said several large distributors in the more developed eastern and southern regions of China had begun to sell down inventories since the end of September.

Shenzhen Haisheng International Petrochemical Trade Co. was one of them.

Tang Mingqiang, who is in charge of the company, said on Wednesday that "it's too difficult to sell oil now."

He said his company would not increase stockpiles before April, when demand would likely become stronger.

Tang's company mainly sells diesel oil to Pearl River Delta factories, whose export orders have slumped. They have slashed production and orders for diesel accordingly.

Energy analysts with CBI, a Beijing-based market research agency, said industrial diesel demand nationwide was down 20 percent to 30 percent so far this year as many smaller factories closed.

Market observers also said it was likely that refined oil production had fallen this month as the two leading refiners, PetroChina and Sinopec, had excess stockpiles. One reason for the inventory overhang was a surge in imports earlier this year to ensure supplies for the Beijing Olympics.

Earlier Xinhua reports said gasoline stockpiles of the two oil giants amounted to 33.1 million barrels in October, up from 30.9 million at the end of September, with diesel storage at 46.8 million tons vs. 51.6 million tons. The large inventories have forced PetroChina and Sinopec to slash production.

According to the National Bureau of Statistics, China processed27.27 million tons of crude oil in November, down 2.3 percent year-on-year.

CBI analysts said PetroChina planned to process some 10.05 million tons of crude in December, 800,000 tons less than in November, and Sinopec planned to refine 12.2 million tons, down 1.32 million tons.


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