Barclays: Chinese oil demand on track to improve

BEIJING - On the heels of a pick up in demand in June, Chinese oil imports are on track to improve, Barclays said in a note on Tuesday.

The banking giant forecast that oil demand in China will grow 5 percent in 2013.

"However, we do not expect underlying demand to keep rising at double-digit levels in coming months," wrote Barclays commodities analyst Sijin Cheng.

Oil demand in June rose over 10 percent year on year and reversed months of gradually slowing growth.

The strong demand was driven by a sharp increase in refinery runs and amplified by a low base, Barclays said.

At this time last year, refiners were cutting utilization rates aggressively in an effort to work down record-high inventories in both crude and products.

Demand was also boosted by an end to maintenance, strong agricultural demand and stable margins, the note said.

However, Barclays said oil consumption is going to feel the strain of struggling industries, as China's economy has continued to slow.

China's GDP growth dipped to 7.5 percent in the second quarter, and analysts have forecast that annual growth is likely to touch the government's target of 7.5 percent, which would be the lowest level since 1990.