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According to the statistics figures, as reported by Reuters, China’s crude output level was 3.83 million bpd in May, down by 3.7 percent year on year, to the lowest domestic production volume since the statistics office started publishing records in 2011.
“Declining output this year comes as China’s major oil fields Daqing and Shengli announced production cuts at the beginning of the year. The pace of decline in production will ease this year due to higher crude prices,” Gao Jian, a crude oil analyst with China Sublime Information Group, told Reuters.
Late last year, PetroChina said that it planned to cut capital spending at China’s largest oilfield Daqing by 20 percent in 2017.
Last month, China’s refinery runs jumped by 5.4 percent on the year to 10.98 million bpd, and although they were down from a record level from March this year, throughput marked the highest year-over-year growth in May 2017 since May 2015.
The growth in refinery runs further fuels concerns that there might be a domestic glut in diesel and gasoline while demand growth is slow. Earlier this week, sources in the know told Reuters that the biggest state refiner, Sinopec, could rreduce fuel production in the third quarter this year, due to the fuel glut, slower demand growth, and competition from independent refiners.
China’s crude imports in May, on the other hand, surged by 15.4 percent on the year to 8.8 million bpd, according to preliminary data by the General Administration of Customs cited by Platts. The jump in imports was mostly attributed to state refiners’ imports, but analysts expect that imports would slow in June because inventories are high, and then increase again in July due to the peak demand for oil products in the summer.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.