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UPDATE 3-China's CNPC forecasts record oil demand, warns on product glut
January 12, 2017 / 7:26 AM / a year ago

UPDATE 3-China's CNPC forecasts record oil demand, warns on product glut

* China crude demand to rise 3.4 pct y/y to record ~12 mil bpd
    * Refinery throughput to rise 3.3 pct y/y
    * Annual domestic refining glut could top 3 mln bpd by 2020

 (Adding table and refining glut detail in 7th paragraph.)
    BEIJING, Jan 12 (Reuters) - China's crude oil demand will grow by 3.4 percent this
year to a record of almost 12 million barrels per day (bpd), the country's top
state-owned oil producer forecast on Thursday, as refiners in the world's
second-biggest oil user ramp up output.
    The robust outlook for crude combined with surging vehicle sales in the world's
largest auto market boosted oil futures even as the report cautioned that demand
growth for products like gasoline and diesel will slow and the domestic fuel glut will
remain a significant problem.  
    Total crude oil consumption will hit 594 million tonnes, or 11.88 million bpd,
state-owned China National Petroleum Corporation (CNPC) forecast in an
annual report released by its research institute.
    Total refinery throughput will rise by 3.3 percent to 557 million tonnes, or 11.2
million bpd, with refiners adding 702,000 bpd of net capacity. That will increase to
11.8 million by 2020, it said.
    The rising refinery demand will lift crude imports by 5.3 percent to 396 million
tonnes, or 7.95 million bpd. By 2020, it forecast imports will hit 8.2 million bpd.
    But, the rising refinery runs will maintain the domestic supply glut that has
forced refiners to export into a saturated Asian market in recent years. 
    The domestic refining glut will be at least 2.2 million bpd by 2020, but could
surpass 3 million bpd if the market worsens, it forecast.    
    CNPC predicted that net exports of diesel will surge by 55 percent this year to
22.4 million tonnes, or about 450,000 bpd.
    In addition, slowing growth in the world's second-largest economy and the shift to
renewable energy will hamper the  consumption growth for oil products, the report
    "Energy giants will die like dinosaurs if they don't diversify into other energy
products and into clean energy," said Liu Zhaoquan, vice president at the CNPC
institute, at a briefing. 
    (1 tonne crude = 7.3 barrels)
    Below is a table summarising the CNPC's main forecasts:
    All numbers are in barrels per day except for gas, which is measured in billion
cubic metres (bcm)
                2017 forecast    Percent    2020         Annual percent    Percent
                                 change vs  forecast     change            change vs
                                 2016                                      2016
 Crude output                               4 mln        0.3 pct           1 pct
 Crude          11.2 mln         3.3 pct    11.82 mln    2.3 pct           9.6 pct
 Net oil        7.95 mln         5.3 pct    8.16 mln     3.5 pct           14.6 pct
 Oil demand     11.88 mln        3.4 pct                                              
 Gas            216.2 bcm        5.9 pct                                              
 Gas imports    81.5 bcm         11.2 pct                                             
 Net exports    450,000 bpd      55 pct                                               
 of diesel                                                                 

 (Reporting by Muyu Xu, Stella Qiu and Beijing newsroom; writing by Josephine Mason;
Editing by Christian Schmollinger)

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