China Oil Demand in October 2014

 Chinese oil consumption picked up momentum in August, growing by more than 0.36 mb/d, to stand at 10.39 mb/d, led by considerable growth in gasoline and fuel oil compared with the same month a year earlier. LPG also registered growth, albeit at a slower pace. Major contributors to this growth in oil demand data are the low base line of 2013, the continued improvement in year-to-date car sale statistics and the pickup in demand for feedstock fuels to satisfy teapot refinery requirements. Gasoline rose by around 0.25 mb/d or 12% compared with a year ago despite weaker car sales data in August. According to statistics and analysis of the China Association of Automobile Manufacturers (CAAM), sales of commercial vehicles were up by more than 247,000 units from the previous month, yet down by more 16.4% from the levels of August 2013. Jet fuel demand, on the other hand, was down y-o-y by 17 tb/d, or around minus 3% as a result of reduced aviation sector requirements. August diesel demand remained fragile, predominantly as a result of a limitation on industrial activity for the Youth Olympics held in Nanjing during August 2014 as well as slower demand from the agriculture sector. The decline in diesel consumption was around 40 tb/d or just more than minus 1% y-o-y. Fuel oil had positive growth data during August, marking the strongest growth since mid-2013. Fuel oil rose by almost 0.15 mb/d or by more than 34% from the same month a year earlier. This increase is largely attributed to a decrease in maintenance programmes undertaken by teapot refineries, a major consumer of fuel oil in China. However, the fundamentals of the product remain weak as substitution with other fuels continues. Risks to the outlooks for 2014 and 2015 are mainly focused on a slowing pace in economic growth and implementation of measures in order to limit transportation fuel consumption. On the other hand, the healthy petrochemical segment and expansions in refining capacity could be considered as factors that could push 2014 oil demand estimates higher. For 2014, Chinese oil demand is anticipated to grow by 0.34 mb/d, while oil demand in 2015 is projected to increase by 0.31 mb/d.