Q4 may be harder for top oil company

China National Petroleum Corp (CNPC) will face larger pressures in the fourth quarter in both oil refining and natural gas, analysts said Wednesday, after the country's largest producer and supplier of crude oil and natural gas reported a shrinking loss for its oil refinery business in the third quarter.

"International oil prices may tick up in the second half of November. The rising cost would pressure oil producers and refiners further," Wen Sha, an oil analyst with CBI Research Consulting, told the Global Times Wednesday.

CNPC lost some 6.7 billion yuan ($107 million) in its oil refinery business in the third quarter, according to a financial report it released Tuesday night. However, the loss is an improvement in comparison with a total loss of 23.3 billion yuan over the first half of this year.

Industry analysts said the improvement in loss is mainly attributed to a larger profit margin brought by falling international crude oil prices and price hikes in oil products in China during the third quarter.

The oil refinery business of China Petroleum and Chemical Corp (Sinopec), China's largest petroleum refiner and oil products producer, had a better performance than CPNC and made a profit of some 3 billion yuan in the third quarter, as its financial report released Monday showed.

"The difference in performance can be partially explained by the fact that CNPC imported some of its crude oil from Kazakhstan and Russia, bringing a higher production cost," said Cheng Ruifeng, an analyst at oilgas.com.cn.

He also expressed concerns over pressure facing domestic oil product producers in the coming months, saying, "market demand for diesel oil will remain weak, though demand for gasoline may improve a little bit."

CNPC reported an increased loss in the third quarter in its natural gas business, which it said was due to a rising proportion of imported natural gas, which it must sell at a loss.

Separately, Sinopec signed a deal Wednesday with Russia's petrochemicals giant Sibur, buying in 25 percent plus one additional share of a rubber plant in Krasnoyarsk owned by Sibur.