Chinese demand for oil up 6.2%

Oil demand by China rose 6.2 percent in February, picking up the pace from a sluggish January as state-owned companies increased imports to ensure plentiful domestic supplies before the Olympics, according to data released Monday.

The increase exceeded the 3.3 percent rise in January and the 3.5 percent rate for all of 2007. Political pressure has been intensifying for the government-controlled Sinopec and PetroChina to keep their retail outlets well stocked, despite losing money by refining imported crude at prices above $100 a barrel.
“The government’s policy since the last quarter of 2007 has been playing a big role to ensure supply,” said Yan Kefeng of Cambridge Energy Research Associates. “Refiners were forced to slash exports and raise imports.”

For a good part of the summer, refineries scaled back production to salvage their bottom lines, leading to weeks of widespread diesel rationing by autumn.

But refineries bowed to government pressure after repeated official mandates, including calls by Premier Wen Jiabao to maximize output and plug shortages, plus a surprise 10 percent increase in retail prices in November.

International Herald Tribune