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China's appetite for oil imports increases
by Staff Writers
Beijing (UPI) Aug 15, 2011

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China's dependence on imported oil grew to 55.2 percent in the first five months of this year up from 55 percent last year, reports state-run news agency Xinhua, citing figures from China's Ministry of Industry and Information Technology.

In 2009, however, China's dependence on imported oil rose to 33 percent.

MIT figures indicate China's oil consumption rose 10.3 percent year on year to 198 million tons in the first five months this year. During that period, oil imports rose 11.3 percent to 107 million tons.

China's rising appetite for imported oil poses a threat to the country's energy security, experts told Xinhua, saying the government should beef up energy management to ensure future supplies.

Tong Xiaoguang, a researcher with the Chinese Academy of Engineering, predicts China's dependence on imported oil to reach 60 percent by 2020 and 65 percent by 2030, pointing to continued urbanization and industrialization.

Tong said the Chinese government should set a ceiling for oil consumption and adopt measures to keep consumption within the ceiling volume.

A CAE study on China's mid- and long-term energy development strategy shows that China will need 644 million tons of crude oil annually even at the lowest forecast demand for 2030.

Yet growth in China's apparent oil consumption, which equals production plus net imports, is expected to slide to 5 percent a year on average from 2011 to 2015, reflecting slower economic expansion in the world's second largest economy and its efforts to cut emissions, says the China Petroleum and Chemical Industry Federation.

That compares with China's average annual growth of 7.7 percent in apparent oil consumption from 2006-10.

"We project domestic apparent oil demand, which includes domestic production and imports but excludes exports, will have a year-on-year rise of 6 percent in 2011, broadly easing from the first half of this year," Fan Debiao, who heads the federation's information and marketing department, told China Daily newspaper.

Dong Xiucheng, professor with the China University of Petroleum, warned that the Chinese government should take note that the country's oil consumption growth has already outpaced that of the overall economy, signifying that its economic development has largely depended on energy-intensive industries.

The International Energy Agency's monthly oil market report released last week, indicating a cooling in the expansion of global oil demand, said the decline was led by China, in which oil demand fell by 1.5 percent from May to June.

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Oil prices climb as markets rebound
New York (AFP) Aug 15, 2011 - Oil prices surged Monday as stock markets rallied and the dollar weakened, stoking demand for greenback-priced commodities.

New York's main contract, West Texas Intermediate crude for delivery in September, closed at $87.88 a barrel, a rise of $2.50, or nearly 3.0 percent, from Friday.

In London, Brent North Sea crude for September gained $1.88 to settle at $109.91 a barrel.

A weaker US currency makes dollar-priced crude oil cheaper for holders of stronger currencies, helping to stimulate buying.

The dollar fell against the euro after the European Central Bank said it bought 22 billion euros ($31.8 billion) of government bonds last week to help ease the pressure on Italy and Spain, pushing down their borrowing costs.

Oil also got a boost from returning confidence to stock markets, which appeared to find their footing Monday after a roller-coaster week dominated by a Standard & Poor's ratings downgrade of US credit and public debt problems on both sides of the Atlantic.

"After a very turbulent week last week... the temperature and volatility have abated somewhat," said Bart Melek, at TD Securities.

Nevertheless, Victor Shum, an analyst with Purvin & Gertz energy consultants, told AFP that he expects the oil market to remain volatile.

"I expect that the market will continue to be rocky and volatile because there's still concern about a potential return of the global economy to a recession," he said.

Michael Fitzpatrick at Kilduff Report agreed.

"Elevated volatility across all major asset classes will most likely continue this week as the debt crisis on either side of the Atlantic, combined with slowing economic activity, still has participants on the edge," he said.

Traders shrugged off a dismal manufacturing report in the United States, the world's biggest oil consumer.

The Federal Reserve Bank of New York said its manufacturing index for New York state slumped 3.8 points in August from July, to negative 7.7, the third straight month in negative territory.

By contrast, official data on Japan's economy was much better than expected in the aftermath of the March earthquake and tsunami disaster.

Japanese gross domestic product shrank 1.3 percent in the second quarter from a year ago, less than half the average estimate, signaling the recovery is gaining traction.

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