Chinese refineries processed 9.71 million barrels per day of crude oil in October, according to the data released by the National Bureau of Statistics. It was 3.1% higher than a year earlier and 2.9% increased from a month ago. Although crude oil processing in China slipped from a year ago level in September, it rebounded to the highest level since March.
Meanwhile, China's crude oil imports in October fell 13.8% on year to 4.82 million bpd, according to the customs data. Since net crude oil imports in the month was 4.80 million bpd, the gap between the amount of processing was 4.91 million bpd. The shortage of supply was filled up by domestic production and the supply from inventories. Domestic crude oil production in China was averaged at 4.16 million bpd during the first nine months of 2013, meanwhile, crude oil stock in the country had increased by 11% during August and September.
The Chinese government announced that the country's industry production index rose 10.3 on year in October, it was the third consecutive double digits of year-on-year increase. Electricity generation in the nation rose 8.4% on year, automobile production surged by 25.5% from a year ago and ethylene output rose 16.9% on year. Those figures suggest a steady petroleum demand in China.
Petroleum inventories in China have a tendency that the crude oil stock hits the peak during the third quarter and the petroleum products stock sinks to the annual bottom in the same period. To the contrary, the inventory of crude oil falls to the bottom in the first quarter and the products stock rises to the annual highest level in the same period.
If the similar circulation will be repeated in the near future, crude oil processing in China could increase towards Q1 of 2014, and inventories of petroleum products are likely to rise. However, the petroleum products stock level in Q3 of this year was 6.1% higher than a year ago, it was a much larger increase than the crude oil stock level that was only 2.4% higher from the last year. A slower than expected consumption of petroleum products during the first nine months of this year might be caused such situation.
Chinese refineries increased their crude oil processing to above the 10 million bpd level during November 2012 and February 2013. Chinese industries seemed to decorate the strong economic growth at the beginning of the new Xi Jinping's administration. If Chinese refineries try to increase their crude oil processing at higher than the previous year's level in the coming several months, the already high petroleum product stock might surge to the critical level. Chinese oil companies could suffer the significant write-down if crude oil prices fall further.