Chinese refiners lowered December crude runs amid weak demand - JLC

China’s state-owned refiners, Sinopec and PetroChina, reduced their refinery run rates in December due to sluggish demand, market intelligence provider JLC reported.

PHOTO: China oil. Getty Images

The slowdown in oil demand from China, one of the world's biggest oil consumers, directly affects the global oil market. Furthermore, as a significant player in the global oil market, any signs of reduced demand in the country could exert downward pressure on Brent's spot prices.

“State-run refiners found poor sales of fuel, which prompted them to further cut their run rates,” JLC said.

Sinopec and PetroChina processed a total of 36.70 million mt of crude in December, with an output of 1.18 million mt/day (8.72 million bbls/day). This marked a 1.89% output decline from the previous month. Additionally, both companies operated their crude distillation units at an average of 81.52% of capacity in December, reflecting a 1.71% decrease from November 2023, JLC data showed.

“Gasoline demand decreased in the month due to less travel amid declining temperatures and particularly without the drive of public holidays,” JLC said. “Diesel demand also lessened as end users' activities were slowed down by the colder weather,” the agency further added.

However, on a year-on-year basis, the refinery run rates in December increased by 0.94%, according to JLC's data.

“State-owned refiners are likely to raise their operating rates in January 2024, after China releases export quotas on oil products,” JLC noted.

By Aparupa Mazumder 

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