Implied oil demand in June hit 13.04 mb/d, up y/y by 0.44 mb/d (3.5%) despite slowing economic growth. Actual demand (adjusted for stock changes) was likely higher than implied data suggest, at 13.13 mb/d (+0.51 mb/d y/y), as refiners drew stocks during maintenance season.
Apparent gasoline demand reached 3.32 mb/d in June, 60 thousand b/d (1.8%) lower y/y. Weakness in car sales continues to weigh on demand growth, but we expect the contraction in car sales to decelerate after the switch to the China VI standard (effective 1 July).
Chinese apparent diesel demand reached 3.45 mb/d in June, 0.32 mb/d lower y/y. Actual demand was likely much stronger, according to anecdotal reports, with stocks low. Domestic diesel prices have also been supported by tighter supplies. We expect demand to strengthen
China’s crude imports rose m/m by 0.16 mb/d to 9.66 mb/d in June on new storage filling. Imports from Saudi Arabia reached a record high of 1.88 mb/d on Hengli’s ramp-up, while arrivals from Venezuela and Iran remained muted.
China was a net exporter of products in June at 61 thousand b/d, after the second batch of products export quotas awarded in May allowed refiners to push out products from an oversupplied domestic market into export markets. However, we expect product exports to be lower m/m in July, particularly for gasoline and diesel, with majors lowering runs.
Crude production in June hit 3.93 mb/d, rising y/y by 59 thousand b/d as higher Capex helped stabilise output. In 2019, we forecast that domestic production will be 3.85 mb/d, rising y/y by 57 thousand b/d.