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China Oil Demand in March 2012

Source: OPEC 3/27/2012, Location: Asia

Economic growth within the FSU will be less than last year; hence, the region’s oil demand will not be largely affected. Cold winter has pushed the heating oil price up. This increase will more than offset the minor loss in transport fuel usage. FSU oil demand growth is forecast at 2.5% y-o-y. The risk is leaning towards the upper side, which easily pushes the growth estimate up by another 0.5%. China is gearing up to filling some of its ready-to-use strategic storage with petroleum products and crude oil. It has been embarking upon building and filling its energy reserve for the past few years. Although some of the stock filling data has been only partially available, experts estimate oil stock builds or draws of the commercial and strategic petroleum reserve on a monthly basis. According to the best available information, China added 0.8 mb/d of crude and products to its commercial and strategic storage in January.

Although this move affected the international oil market, it has not been included in the country’s oil demand estimate. This affected overall oil demand for January. China’s oil demand growth for the first quarter is estimated at 0.3 mb/d y-o-y, down by 0.1 mb/d from the previous estimate. Its economic sectors (transportation, industrial and agriculture) will show healthy activity during the year, leading to more consumption of oil products. China’s oil demand for the year is forecast to grow by 0.4 mb/d, or 4.2%. This trend is similar to that of the past few years.

Data from the China Association of Automobile Manufacturers shows that the country’s automobile sales decreased strongly, by 24%, in January. This decline resulted from recent government moves to curb the use of cars by officials, and it was also a result of the country’s weeklong Lunar New Year holiday, which started in mid-January this year. Such factors can play havoc with year-on-year comparisons of data. Furthermore, the country's once-booming auto market has been losing steam, as the economy has slowed, fuel prices have increased and the government’s traffic restrictions to help reduce emissions have negatively influenced auto sales.

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