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Beijing: China's implied oil demand growth slowed to 3.3 per cent in January after a robust end to 2007, as a harsh winter that knocked out power and stranded millions of people dented fuel consumption.
Beijing has vowed to tame its galloping economy through a relentless fight against inflation and feverish investment, policies that could curb oil use amid worries of a global economic slowdown. In January, the world's second-largest oil consumer used 7.17 million barrels of oil, calculations based on official data showed, off December's 6.4 per cent increase and flat with the 3.5 per cent growth for 2007.
The tepid start to 2008 could have been due to a fierce winter since late January that crippled rail lines, halted construction and frozen highways, as tens of millions of people travelled home for the Lunar New Year family reunion.
But analysts are optimistic that China's oil use will pick up in later months with increasing economic activity and a booming transportation sector spurred by the summer Olympics, offsetting the government's cooling measures.
While Beijing's resistance to raise fuel prices could stoke another round of refinery production cuts similar to those late last year, the government has the political will to order state refiners to maximise output.
"The last thing the government wants is to see is taxi drivers protest when people from the world visit the country," said Victor Shum at Purvin & Gertz.
"I expect demand to be strong on efforts to build inventories ahead of the Olympics. And it will have a halo effect even after the Games are over."
Data from the National Statistical Bureau released on Thursday already showed a firm start in refinery throughput, up 5.7 per cent in January and a 7.4 per cent increase in the first two months of the year. The International Energy Agency also projected China's oil demand to quicken this year, at a pace of 5.6 per cent versus last year's 4.6 per cent.
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