Beijing - China's unquenchable thirst for oil is contributing to sustained high prices, but it is not the main factor in crude's latest surge toward new records, analysts said on Wednesday.
Speculative trading, geopolitics such as unrest in the Middle East and US efforts to fill its oil reserves, as well as the weakness in the US currency, are more important reasons for crude nearing $100 a barrel, they said.
"China's oil demand is growing but not in a spectacular or explosive fashion," Alain Sepulchre, an independent French oil analyst, told AFP. "Many people are using China as a pretext."
China is the world's second-largest importer of crude, and according to the International Energy Agency, will overtake the US as the world's number one in three years.
But even if China's need for energy plays an undeniable role in pushing up prices, the role of the West is bigger and speculative trading is much bigger, Chinese analysts argued.
"Demand from Europe and the US remains large. The US is also seeking to fill its petroleum reserves," said Liu Youcheng, an oil analyst at Hongyuan Securities in Beijing.
And while demand in China is rising, it remains well behind the US.
China, the world's second largest consumer averaged consumption of 7.16 million barrel per day last year, compared with 20.69 million barrels per day in the US.
"Right now the main reason for the rise in oil prices is the US dollar. China's demand is a long-term element," said Qiu Jing, an oil analyst with Maike Futures in Shanghai.
"With international oil traded in dollars, the weakening dollar has had a large effect on increasing oil prices."
Oil rose above $99 per barrel for the first time on Wednesday as the fall in the dollar helped drive demand for dollar-denominated crude, dealers said.
Albert Kwong, chief of Hong Kong research and consulting firm Petro Asian, said the speculative element was adding a further 25% premium to current prices.
"At least 20 to 25 US dollars is a premium in speculation by oil traders," said Kwong.
China keenly feels the impact of global market movements, as imports account for nearly half its consumption, a proportion that keeps rising as the government continues to subsidise expensive oil prices.
According to official data, China imported 124 million metric tonnes of oil in the first nine months of 2007, up 13.6% from the same period last year.
Acknowledgement in Beijing that the nation faces an energy crisis unless it taps new sources of energy has sent the nation's oil groups scrambling around the world in search of fresh supply, which has drawn concerns in the West.
Qiu said:"China currently is focusing on importing oil and encouraging imports because every country is trying to secure more crude.
"The domestic strategy is basically to develop overseas oil fields and preserve the domestic ones."
China has sought to deal with oil in nations that have been spurned by the West for geopolitical reasons, such as in Iran, parts of Africa such as Sudan and Central Asian countries.
A strong argument in China is that the nation's demand has grown only in line with its economic growth, while per capita consumption lags far behind Western standards.
Per capita annual oil consumption is nearly three tonnes in the US but China it is less than 400kg, said Lin Boqiang, a researcher at Xiamen University's China Centre for Energy Economics Research.
"If Western countries consume less, the faster growth in demand from China would be offset and overall growth will not be so fast," Lin said.
- AFP