UPDATE 2-China June oil demand growth slowest in 27 months

* June oil demand up 1.1 pct on year, slowest since Apr '09
* Crude runs in first drop since Feb '09 due heavy repairs
* Demand to quicken on peaking maintenance, economic outlook (Adds analyst comments, writes through)
By Judy Hua and and Chen Aizhu
BEIJING, July 13 (Reuters) - Chinese implied oil demand rose 1.1 percent in June from a year earlier, the slowest growth in more than two years, as oil plants underwent heavy maintenance amid poor refining margins and Beijing's tightening policy cut into oil use.
But analysts said real oil use may not be as bearish as the figures show as oil firms may have been drawing on oil inventories, which were not reported by the government, to ease the pain of negative refining margins.

If Beijing continues its persistent battle against inflation, oil demand in the world's second-largest consumer could grow slower than the pace of 5 to 7 percent forecast early in the year but should quicken up from the June rate as the economic outlook remains solid.
"With China's monetary tightening close to an end and car sales growth also resuming, China's oil demand growth will track economic growth higher in the months ahead," said Gordon Kwan, head of energy research at Mirae Asset Securities in Hong Kong.
Implied demand, crude oil throughput plus net imports of refined oil products, averaged 8.97 million barrels per day (bpd) last month, down 3.2 percent from May, and slipped below the 9 million bpd mark for the first time in 8 months, according to Reuters calculations based on preliminary official data.
June refinery production dipped 0.7 percent from a year earlier in its first decline since February 2009, a main drag on the apparent demand, as state refiners went through what was possibly one of the heaviest turnaround seasons.
"Oil demand declined last month as wheat harvest and summer corn planting ended around Mid-June, while a summer fishing moratorium started in the East and South China Sea," said Dai Jiaquan, a senior oil market researcher with CNPC, parent of PetroChina .
Peak maintenance at major refineries plus slower growth in infrastructure construction due to torrential rains across the country also reduced oil demand, Dai said.
"If the government maintains the tightening monetary policy, oil demand this year could be lower than the 6.2 percent growth rate we forecast at the beginning of this year," he said.
Despite easing growth, China will continue to provide the majority of the world's increased crude use, at 40 percent in 2011, the International Energy Agency forecasts.
Still strong economic statistics released on Wednesday offered some support for oil demand in the coming months.
The world's second-largest economy grew faster than expected in the second quarter at 9.5 percent, easing fears of a hard landing while industrial output in June was also stronger than expected, growing at its fastest pace in over a year.
"While worries of a slowdown exist, I believe the domestic demand for refined products will remain steady in light of the strong official economic statistics," said Priya Narain Balchandani, oil products analyst at Standard Chartered Bank.


STOCK DRAW, REFINING LOSS
Analysts attribute the double-digit oil demand growth in the first quarter of this year partly to a buildup of crude and oil products inventories and the slowdown in June could have resulted from a stocks drawdown on fear of a fuel price cut by the government following a drop in crude prices.
"We have heard some indications that inventory holders are selling down levels in fear of price cuts. This has also shown up in wholesale prices being below controlled NDRC caps -- indicating more products in the market," said Brynjar Bustnes, head of Asia-Pacific oil and gas research at J.P. Morgan.
Beijing skipped approval of retail fuel price increases expected in May for fear of stoking inflation, leaving many Chinese oil plants weighed under by weak or negative margins.
"The depressed domestic refining margin has discouraged imports of crude oil; refiners are losing about $5 a barrel after-tax for every barrel of crude they refine since the last fuel price hike," said Gordon Kwan.
China scaled back crude imports by 11.5 percent in June over a year earlier, the first slide in six months.
Apart from maintenance and the high oil price, Beijing's repeated moves to tighten credit affected fuel use, oil marketing officials said.
"The peak demand earlier anticipated for diesel is coming slower than expected. Many medium and small-sized industries were having difficulty securing financing and thus scaling back on fuel use as they're now very costly at this oil price," said a fuel marketing official with Sinopec Corp .
The world's fastest growing major economy raised benchmark interest rates by 25 basis points last week, its third hike in the past six months to tame prices. Inflation rose to a three-year high at 6.4 percent in June.
But implied oil use should recover in coming months as refinery maintenance is likely to have peaked in June and some 200,000 bpd new refining capacity is set to come online in the second half of this year.





















(Additional reporting by; Florence Tan in SINGAPORE;Editing by Clarence Fernandez)