China became a net exporter of refined oil products such as petrol and diesel for the first time in more than four years in March, underlining the growing size and importance of its domestic refining industry.

Exports of oil products were 650,000 barrels a day in March, up 3.4 per cent on the same month a year ago, according to official customs data released on Thursday, while imports totalled 560,000 b/d, down almost 25 per cent on a year earlier and the lowest since August 2012.

Analysts said this was only the third time since records began in 2004 that China has been net exporter of oil products; the other occasions were December 2009 and January 2010.

“We believe the trend towards China exporting more and importing less refined products will intensify over the course of 2014 and 2015, driven by a large expansion of domestic refining capacity, including 800,000 b/d this year,” said Citi analyst Ivan Szpakowski.

China’s fuel consumption rose at the slowest rate in more than two decades in 2013 as the economy started to slow, ending a decade of rapid growth that helped drive global oil prices above $100 a barrel.

Yet China has continued to build new refineries and add further processing capacity.

The result has been a domestic supply glut that has not only hurt refinery profit margins but also led to a rise in diesel and fuel oil exports to Asia.

It has also seen several international oil companies backtrack on plans to invest in Chinese refineries.

“While the March product trade breakdown will not be released until the second tranche of trade data, we expect changes in fuel oil, naphtha and diesel flows to have driven much of the shift to net exports,” added Mr Szpakowski.

Amrita Sen, analyst at Energy Aspects, said the figures were a reflection of both China’s excess refining capacity as well as slowing demand as the world’s second-biggest economy.

“This is really a story about import compression and burgeoning stocks,” she said. “Excess refining capacity is leading to higher product supplies domestically. As a result, China is able to pull back on imports.”

The customs data also showed China’s crude oil imports had fallen below 6m b/d for the first time in the three months in March to 5.55m b/d.

Ms Sen said the reason China had not exported greater volumes of oil products in March was due to weak margins.

“Diesel exports have been challenged by poor economics since the spread between Chinese prices and those in Singapore have been too narrow to allow for profitable exports.”

ICE Brent May fell 0.4 per cent to $107.50 a barrel.

Separately, Opec said demand for its crude oil would average 29.65m b/d in 2014, down 50,000 b/d from its previous estimate, citing softer economic growth in emerging markets and Japan.

In its monthly update, Opec, which pumps more than a third of the world’s oil, also said output had fallen by an estimated 626,000 b/d last month to 29.6m b/d.

A large drop in Iraq’s oil production of almost 300,000 b/d was responsible for most of the decline, the report showed.

Iraqi oil production surged to a 35-year high in February following the completion of infrastructure projects in the south of the country.

However, analysts said the country would struggle to maintain recent export levels, which were inflated by a rundown of oil stocks and a backlog of tankers waiting to load following weather disruptions in January.

Elsewhere, the US government on Thursday said domestic proved oil reserves were 33bn barrels in 2012 after a 15.4 per cent annual increase, the largest since 1970.

Natural gas proved reserves fell 7.5 per cent to 323tn cubic feet in 2012 due to low gas prices but the Energy Information Administration said it expected that they had increased in 2013 as prices rebounded and drilling technology improved.

Proved reserves are energy sources estimated as recoverable from known reservoirs under existing economic and operating conditions.