IEA ups China Q1, full year 2007 oil demand estimates to 7.29 mln, 7.56 mln bpd

IEA ups China Q1, full year 2007 oil demand estimates to 7.29 mln, 7.56 mln bpd

	Published : Tue, 13 Feb 2007 10:55 By : Agencies Print this Story

BEIJING (XFN-ASIA) - The International Energy Agency (IEA) said it is raising its China oil demand projections for the first quarter and all of 2007 to 7.29 mln barrels per day and 7.56 mln barrels per day (bpd), an increase of 0.17 and 0.21 mln bpd from its last estimate.

In its monthly oil market report, the agency also said it is increasing its second quarter 2007 China demand projection by 0.32 mln bpd, bringing total demand for the period to 7.71 mln bpd.

The revisions come on the back of newly submitted annual data and more detailed refinery throughput information based on refinery type.

But the agency cautioned that it may revise the projections further should better information emerge, particularly regarding hard to track areas such as smuggling, direct crude burning or crude and oil product stock building.

China's net crude imports fell to 2.5 mln bpd in December, roughly 0.7 mln bpd below November levels, the IEA said, adding that the December refinery throughput data suggest that the country may have slowed down its crude stock building during the month.

December refinery throughput was flat month-on-month at 6.4 mln bpd, indicating a growth rate of 9.3 pct year-on-year. The agency said it expects January crude runs to be slightly lower, but runs in February are expected to increase in response to travel demand.

The Paris-based organization said that recent estimates have placed strategic reserve stocks at the Zhenhai oil base in east China at 25 mln barrels by the end of last month. But it said that other estimates have suggested that the figure may be much higher.

Changes to the country's oil product pricing mechanism that were announced at the end of last month are a partial move to bring the Chinese sector closer to deregulation. They can be continued for some time if combined with trade restrictions, the report said.

It added that the effectiveness of the changes, which link retail fuel prices to a basket of crude prices with the addition of a margin, will depend on the frequency of price changes.

An increasing price environment would encourage refiners to minimize crude stocks and withhold stocks before pending price changes, the IEA said.

The agency revised down Chinese oil production estimates by 25,000 bpd to 3.71 mln bpd due to lower baseline supply for the end of 2006.

First and second quarter 2007 production estimates are 3.68 and 3.70 mln bpd.

The report said that China's recent production levels indicate that there may be further downside adjustments for the big Daqing oil field in northeast China, although those revisions could be offset by production that is higher than currently shown from elsewhere, including coal-to-liquids supplies.

sean.mangieri@xinhuafinance.com