CHINA - Oil demand shot up in October, lifted mainly by a boost in consumption of middle distillates and fuel oil. Demand last month topped 9 million b/d, up 12.7% year-on-year, according to Jet Fuel Intelligence calculations based on refinery runs plus net product imports. China's jet kerosene usage jumped to 437,000 b/d in October, up 17% year-on-year and up 3.6% from the month before. For the first 10 months of the year, China's jet kerosene demand has averaged 369,000 b/d, a 24% gain from the same period last year. Calculated following the release of detailed customs data last week, the figures do not yet reflect the diesel crunch that has recently hit parts of China (JFI Nov.22,p4). "With shortages in October ... being met by a swift increase in diesel production and imports in November, we would expect some further robust readings in the middle of the barrel to emerge over the next few months," analysts at Barclays Capital commented in a research note. A sudden surge in diesel use for power generation, compounded by seasonal farm demand, has led to localized shortages, and China is forecast to become a net importer of diesel both this month and next. But the data show China was still a slight net exporter of diesel last month - by 76,000 b/d - while apparent diesel demand averaged nearly 3.2 million b/d, up 7.8% year-on-year and essentially flat compared to September. The diesel crunch is blamed on Beijing's policy of cutting energy consumption per unit of GDP by 20% between 2005 and the end of 2010. Local authorities have been rationing electricity to industries deemed unduly energy-intensive, with power cuts becoming more severe toward the end of September. That prompted companies to turn to diesel generators for power, pushing up diesel demand and creating shortages.
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