China releases oil product reserves

China is releasing gasoline and diesel reserves to some regions to ease some of the country's current shortages and stabilise prices.

The release is in response to the domestic refined oil supply and demand situation, the National Food and Strategic Reserves Administration, which manages emergency refined oil products, said on 31 October. It did not specify how much it was releasing and to what regions.

Falling production and electricity cuts, with the country's "dual controls" on energy use and energy intensity, have been squeezing diesel supplies and creating shortages across the country.

Supplies from Chinese independent refiners have been curbed by crude import quota constraints and a tax clampdown on blendstock for diesel. China's total crude throughputs fell for three straight months from a record high in June, while a demand rebound during September-October depleted inventories. This left China with lower volumes to handle firmer demand caused by cuts to grid electricity supplies, which prompted many factories to buy stand-by diesel generators.

State-controlled Sinopec, the largest refiner and diesel producer in China, already plans to raise its diesel output in November given the tighter supplies.

By Richard Davies