While some analysts predicted a…
Both political and economic factors…
Refineries in China processed an average 11.14 million barrels daily last month, or a total of 45.77 million tons, which constituted a 3.4-percent annual increase, the country’s National Bureau of Statistics announced. The daily runs were the highest on record.
According to an IHS analyst, Harry Liu, the increase resulted from a spike in diesel demand, itself brought about by greater demand for coal and steel that pushed up the prices of these commodities. To reign in the price of coal, China reopened some mines to increase local output, and this further strengthened diesel demand.
Another contributor to the record was a group of independent refineries, the so-called teapots, which won three months ago new quotas for imported crude. These could be the last quotas for teapots in the foreseeable future, as earlier this month S&P Platts reported that the Department of Commerce has not opened a new round of accepting applications for quotas. It should have done so a month ago, to ensure quotas for the first quarter of 2017.
In contrast to the increase in refining, oil output in China was down 9 percent on the year in November, at 3.915 million barrels a day. Still, this daily average was an improvement on the 3.78 million bpd pumped in October, which was a seven-year low. According to Liu, however, now that OPEC and non-OPEC producers have agreed to cap production globally to support prices, this decline in output could slow down.
Interestingly, just a week ago, the Financial Times reported that the director of the National Bureau of Statistics had admitted that some Chinese statistics are falsified. Ning Jizhe wrote in a column for the People’s Daily that “fraud and deception happen.”
However, oil production figures are not the main concern of economists and analysts when it comes to Chinese data. The main concern is GDP figures, which have looked conveniently stable and rounded for years. No wonder then that Ning Jizhe took the helm of the NSB after its former chief, Wang Baoan, was removed and an investigation was launched against him.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.