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Chinese refineries increased their run rates by 11 percent last month as the country began to emerge from the months-long lockdown prompted by the coronavirus outbreak that became a pandemic.
At 13.1 million bpd, the April run rates were also higher than the average for the same month in 2019, although by less than 1 percent, Reuters reported.
The news indicates a marked improvement in oil demand, at least from refineries in the world’s top oil importer. Even the four-month average for January to April was not much lower than the year-earlier period: that average was about 12.28 million bpd, according to Reuters calculations, down by 3.4 percent from the average for January to April 2019. Given the massive change in oil demand from a year ago, the reduction in run rates was indeed modest.
To compare, in February, at the height of the outbreak in China, refinery run rates fell to the lowest in six years, at some 10 million bpd. At the same time, refiners took advantage of the oil price rout to stock up on cheap oil while the rout lasted.
Now, refinery runs are expected to continue to rise as industrial activity in China recovers to normal levels. Capacity utilization rates at independent refiners rose to 73 percent last month, according to data cited by Reuters, which was a record high. Meanwhile, at state refiners, utilization rates have increased to an average of 79 percent this month.
Refiners in China could use a pickup in oil demand for sure. Last year teapots added 900,000 bpd in new refining capacity, raising concerns about excess in that department. Total refining capacity on the world’s largest oil importer stood at 17.2 million bpd as of the end of 2019, and if refiners stick to their plans, it should continue rising.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.