China’s oil refining slowed from a record in December as weak diesel demand curbed operating rates in the world’s second-largest energy consumer.
Crude refining in the first two months of 2016 rose 4.6 percent from a year earlier to 87.08 million metric tons, or about 10.64 million barrels a day, according to data released by the National Bureau of Statistics on Saturday. That’s down 1.5 percent from the record 10.8 million barrels a day in December.
Chinese plants are reducing output even amid higher refining margins from the government’s decision to suspend cutting fuel prices when crude falls below $40 a barrel. The nation’s oil product stockpiles rose at the end of January, with diesel consumption falling 16 percent from a year earlier, according to the National Development and Reform Commission.
“Swelling stockpiles at domestic plants may curb further increases in refinery runs,” Jean Zou, an analyst with ICIS China, said before today’s release. “Refining margins are good for them, but they need to consider if there is enough storage space for higher output.”
China’s government decided to suspend fuel price adjustments with declining crude prices to tame demand growth and cut pollution. The decision encouraged refiners to boost crude imports while selling more products domestically during the first two months of the year. Brent oil, the global benchmark, averaged below $33 a barrel during that period.
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China’s crude output fell 0.6 percent to 34.11 million tons (4.17 million barrels a day), Saturday’s data showed. Natural gas production climbed 5.7 percent to 25.1 billion cubic meters and coal output declined 6.4 percent to 513.5 million tons.
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