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UPDATE 2-China oil demand ebbs, crude imports hit '08 trough

Published 12/22/2008, 06:43 AM
Updated 12/22/2008, 06:45 AM

(Adds background, implied demand fall)

By Jim Bai and Tom Miles

BEIJING, Dec 22 (Reuters) - China's crude imports in November fell to their lowest this year and oil demand shrank for the first time in three years as China's economy began to hurt under the weight of the global financial crisis.

China had imported bumper shipments of crude in recent months as the international crude price slid below the $83.50 mark, which Chinese officials have said was the equivalent of China's state-set fuel prices until a reform of prices last week.

Refiners scaled back their operations as fuel stockpiles grew and the economy slowed. A Reuters calculation showed that apparent demand, based on consumption and imports of refined oil products, was 3.2 percent lower in November than a year before.

The world's No. 2 oil consumer imported 13.36 million tonnes or 3.25 million barrels per day of crude during the month, down 1.86 percent from a year earlier, the General Administration of Customs said on Monday, confirming earlier data.

Saudi Arabia remained China's top supplier during the month, but its crude may not have reached China's refineries. Sources who monitor shipments in China told Reuters earlier this month that about 7.3 million barrels, mostly from Saudi Arabia, had gone into China's new strategic storage facility, its third.

Sudan doubled its Chinese crude supplies from last November and leapt up the table to become the fourth-biggest supplier, behind Angola and Iran. Despite Sudan's surge, African crude bore the brunt of China's slowdown, hitting its lowest point since at least January 2006.

For a graphic of crude oil imports by region of origin, please click https://customers.reuters.com/community/commodities/graphics/china_imports.htm.

Just a few months after buying record fuel supplies for the Olympics, state-owned oil firms had to draw down their holdings because the demand outlook was worse than expected due to fast declining economic growth.

Gasoline exports rose 27.8 percent from a year earlier to 283,823 tonnes in November, the customs agency said, the second consecutive increase after sharp falls in the summer months.

Meanwhile diesel imports in November slumped nearly 80 percent from a year earlier to 40,425 tonnes, after dwindling 46 percent in October.

The country's diesel imports are expected to soar to their highest in 19 months in December, a Reuters poll showed.

Worsening weather and an earlier-than-expected cut in fuel prices could further support demand in December. The government cut gasoline, diesel and kerosene prices by 14, 18 and 32 percent respectively on Dec. 19 as part of an overhaul of the fuel pricing and tax system.

The price cuts cheered drivers, since they were not expected until Jan.1, when the tax reforms come into force, placing a new burden of tax on the refiners.

Despite a grim outlook for overall demand, fuel oil imports increased 11.67 percent to 1.39 million tonnes in November, the first increase since June as independent refiners, which process fuel oil rather than more tightly-controlled crude oil, stepped up operations after dives in import costs.

For a graphic of China's fuel oil imports by country of origin, please click: https://customers.reuters.com/community/commodities/graphics/china_imports_2004.htm

China imported 269,800 tonnes of liquefied natural gas in November, up 7.43 percent from a year earlier, customs data showed.

(Reporting by Jim Bai, Editing by Jacqueline Wong and Anthony Barker)

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