Chinese refineries saw output fall 6% in July

China’s crude oil refineries produced 6.1 percent less fuel in July than a year earlier, marking the fourth consecutive monthly drop in production.

The daily processing rate was about 13.91 million barrels, the lowest since October 2022, Reuters reported, citing data from China’s National Bureau of Statistics.

The average daily processing rate for the first seven months of the year was slightly higher at 14.37 million barrels, still down 1.2 percent year-over-year.

However, domestic oil production rose by around 3.4% to 17.9 million tonnes. This is equal to about 4.22 million barrels per day.

China’s crude imports also fell in July to the lowest level since September 2022 as refiners cut capacity utilization rates amid weaker fuel demand. Independent refineries, known as teapots, operated on average at 56.11 percent of their capacity in July, according to China-based consultancy Oilchem. This was 7.3% lower than the July 2023 average.

Demand for the fuel in China has been affected by greater adoption of LNG-powered trucks and, more recently, alternatives to cars, including high-speed rail and air travel.

Higher sales of electric and hybrid vehicles also weighed on demand for fuels, although demand for gasoline has remained stable in recent months. China led the world in electric vehicle sales last month, posting a 31 percent increase in combined electric and hybrid car sales.

In related news, factory output in China slowed last month, missing analysts’ expectations for growth and suggesting negative implications for oil demand. However, it rose 5.1%, against expectations of 5.2%. July growth was also slightly lower than forecasts, coming in at 5.2%.

Refinery and production data from China will likely weigh on oil prices which have just started to recover from a decline earlier this week driven by geopolitical factors focused on the Middle East.

By Charles Kennedy for Oilprice.com

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