China's oil consumption edges up

Beijing: China's apparent oil consumption crept up just one per cent in November from a year earlier, hit by fuel shortages that persisted through the month in spite of a string of government moves to smooth supplies.

China's refiners retreated from the market in the autumn because low state-set prices, combined with global crude markets climbing toward $100 per barrel, were causing massive losses.

Faced with the worst fuel crisis in four years, Beijing raised prices at the start of November to tempt its plants to increase runs and issued a set of directives to remind oil majors of their "social duty".

The shortages eased, but only slightly, nudging apparent consumption up about 2 per cent from October levels to 6.96 million barrels per day (bpd), but leaving it just 1 per cent above a year ago, Reuters calculations from official data showed.

Diesel imports

Net imports of oil products were also the lowest since May 2005, despite the highest diesel imports for three years, as oil firms also shunned loss-making purchases abroad.

For the year through Nov-ember, implied demand - net imports plus refinery output, but excluding inventory changes which are not reported - rose a slightly more robust 3.3 per cent to 6.91 million barrels per day, the figures showed.

These key swing producers provide up to 15 percent of supply, so it is hard to keep the market well supplied without them.

"Offsetting the refinery throughput increases by the large refiners, the small independent refiners have not increased their runs," said independent analyst Paul Ting.

But under pressure from Beijing, and perhaps hoping for a repeat of the multibillion dollar comp-ensation packets handed out to Sinopec in the last two years, the two majors appear to be reining in maintenance and increasing output fast.