China’s crude oil production declined last month.
Oil production in the world’s second largest economy dropped to 6-year low in August, as the country’s state-run energy giants continued to produce less due to aging and high-cost fields.
Production in China, the world’s largest energy consumer dropped 9.9 percent from a year ago to 16.45 million tons, the National Bureau of Statistics reported on Tuesday. So far, China’s output has dropped 5.7 percent in the first eight months of the year.
China, which was the world’s fifth biggest producer last year, has suffered from a fall in global oil prices, which made fields too expensive to run.
According to Tian Miao, an analyst with policy researcher North Square Blue Oak Ltd., “As crude prices fluctuate at a relatively lower level, there is no incentive for China’s high-cost producers to raise output any time soon.”
However, production is expected to continue to decline for the rest of the year. A development most oil producing nations said will help tighten global oil glut as the world’s largest consumer look overseas for supplies to complement its production. Last month, China imports rebounded to its highest level since April, mainly boosted by drop in manufacturing output.
“The global oil market rebalancing is progressing,” said Gordon Kwan, head of Asia oil and gas research at Nomura Holdings Inc. in Hong Kong. “Massive capital expenditure cuts have translated to more oil supply destruction.”