Implied oil demand in July hit 12.42 mb/d, up by 0.13 mb/d (1.1%) y/y, despite slowing economic growth. Actual demand (adjusted for stock changes) was likely higher than implied data suggest, and we estimate it at 12.89 mb/d (+0.52 mb/d y/y).
Apparent gasoline demand reached 3.16 mb/d, lower by 0.21 mb/d y/y. The easing decline in car sales and national holidays will support gasoline demand in September and October. Pollution control and mandatory run cuts could tighten supply in October and limit exports.
Apparent diesel demand reached 3.69 mb/d in July, 35 thousand b/d higher y/y. Actual demand was likely much stronger, according to anecdotal reports, as stocks drew. The strength in domestic diesel prices is underpinned by tighter supplies due to yields continuing to shift to gasoline, and by higher demand as infrastructure projects have kicked in.
China’s crude imports rose by 32 thousand b/d m/m to 9.69 mb/d in July as majors restocked after drawing down crude stocks in May and June. Arrivals from Saudi and Kuwait reached record highs as the majors substituted Iranian barrels. We expect imports to pick up again from late September as new quotas awarded in July spurred teapots’ crude buying.
China was a net importer of products in July at 39 thousand b/d, lower by 0.37 mb/d y/y primarily due to a slump in fuel oil imports and a surge in gasoline exports, a trend likely to continue for much of this year. Diesel exports grew by just 10 thousand b/d y/y.
Crude production in July fell by 82 thousand b/d m/m to 3.85 mb/d (+0.10 mb/d y/y). Production growth in Xinjiang on higher Capex offset declines in other mature fields.