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Crude oil processing rates at Chinese refineries inched up last month, by 0.8 percent, as demand for fuels increased globally.
Total output during the month came in at 58.62 million tons, which is equal to some 13.82 million barrels daily, Reuters reported, citing official government data.
This month, China’s fuel exports are expected to rise to the highest since April 2020, Reuters reported earlier this month, thanks mostly to the global diesel shortage that is driving higher production in China and higher profits.
According to one Wood Mackenzie analyst, Chinese refinery runs could hit 14.4 million barrels daily this month.
Even so, the coronavirus remains a challenge. Reuters reported last week that several Chinese refiners had asked their Saudi sellers to reduce the volumes to be delivered in December due to continuing Covid-related restrictions that have affected industrial activity and consequently oil demand.
The report cited unnamed sources as saying that those refineries had asked for half the volumes for November delivery to be scheduled for shipment in December.
Meanwhile, refiners exported 13 percent more fuels last month, recording their third-best month since the start of the year in this respect. Imports of crude also increased last month, and processing rates are seen rising by up to half a million barrels daily this month.
"Gasoline demand is not good but diesel inventories are thin. So the mandate from the headquarters is to boost diesel production to supply the domestic market and also to raise exports," said one Sinopec executive, as quoted by Reuters. The state-owned refining major is seen as the biggest driver behind the expected output increase.
The global diesel squeeze is not showing any signs of changing, which means Chinese refiners will retain motivation for higher production of fuels, especially with the latest, greater, batch of fuel export quotas issued by the Chinese government.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com