China's oil demand is expected to pick up in the second half of 2012, supported by higher industrial output and government measures to boost the economy, the International Energy Agency (IEA) said Wednesday in its monthly oil markets report.
However, the IEA lowered its 2012 estimate for Chinese oil growth to 3.6 percent, down half a percentage point from a previous estimate in May.
China's demand for oil rose to 9.6 million barrels a day in the second quarter, up just 1.8 percent from a year earlier, the IEA said, adding that demand is expected to grow 4.6 percent in the third quarter and 4.7 percent in the fourth quarter.
"Demand growth in the world's fastest-growing market -- China -- has clearly slowed," the Paris-based energy watchdog said. "After stimulus-inflated oil demand growth averaging one million barrels a day between fourth quarter 2009 and fourth quarter 2010, momentum has since eased back considerably."
In the September-April period, China's demand growth slipped to just 125,000 barrels a day -- about one eighth of earlier peak levels, the IEA added. "Consumption has eased back as Chinese economic momentum has subsided sharply."
Demand for diesel and liquefied petroleum gas have been among the worst hit, "as the manufacturing base has lost some of its appetite for these products."
Still, the Chinese government appears determined to ensure that economic activity remains robust, and early indications suggest a pickup in oil demand in May, the IEA said.
"China has taken on the mantle of the biggest single source of oil-demand growth, while the US maintains its position as the largest global consumer," it said. "Concerns over the health of these economies are not new but are now arguably more intense."