OREANDA-NEWS. May 16, 2011. China’s implied oil demand hit its third highest monthly level ever in April as refineries stepped up output to ensure domestic supplies, shrugging off soaring oil prices, but the year-on-year growth rate slipped to 8.8 per cent after six consecutive months of double-digit gains.

At the current pace, China has surpassed a growth rate of 5 per cent to 7 per cent in oil consumption suggested in a Reuters poll earlier this year.

China, which has driven global oil demand growth for the past decade, is also ahead of the International Energy Agency (IEA) forecast for it to account for 40 per cent of increased global crude use of 1.4 million bpd in 2011.

China’s implied demand, a combination of crude oil throughput and net imports of refined oil products, averaged 9.32 million barrels per day (bpd) last month, up from 8.57 million bpd a year earlier, Reuters calculations based on preliminary government data showed.

More detailed data will be available later in the month.

A sustained appetite for oil in China, the world’s largest energy user, could derail predictions by economists that higher oil prices would destroy demand worldwide.

Oil prices had rocketed to levels not seen since a record spike in 2008, driven by supply disruptions in Libya and loose U.S. monetary policy. Brent hit a high of USD 127.02 a barrel last month and U.S. crude surged over USD 114 earlier this month.

The continued rise in China’s demand suggests the country’s system of state-set fuel prices in a market dominated by state-controlled refineries has helped insulate its market from the soaring cost of crude oil.

“Consumers are partially insulated from high crude prices because state oil firms were asked to shoulder their social responsibility to churn out more fuel despite sustaining refining losses,” said Lawrence Lau, executive director of Bank of China International in Hong Kong.

The government last raised retail fuel prices on April 7 by 5.0-5.5 per cent to record levels. Although Chinese prices are even higher than U.S. prices, the rise had a minimal impact as those rich enough to buy a car in China can still afford fuel. China has only raised fuel prices twice this year, at a far more modest pace than the surge in crude oil costs over the period.