China’s Shrunken Thirst For Oil

Even China’s enormous thirst for energy appears to have its limits. Evidence has mounted across Asia in recent days that oil prices have finally grown too rich for China, which accounted for more than 40% of total growth in world demand in 2004 and is expected to feed even more explosive demand this year. But on July 18, OPEC cut 150,000 barrels a day from its forecast for oil-demand growth this year, citing China’s weakening appetite for crude.

Consumption of crude and refined products in China is widely felt to have been a key factor behind record-beating crude-oil futures prices in 2004 and so far in 2005. But traders, analysts, and industry sources around Asia contacted by Platts Global Alert say the latest spike in crude futures, to an all-time nominal high of $62.10 for the benchmark West Texas Intermediate grade on July 7, seems to have burst China’s demand bubble.
BusinessWeek