CHINA National Petroleum Corp. (CNPC), the country’s biggest oil and gas producer, will have difficulty in meeting its profit targets this year because of crude oil’s slump this month.

    The firm, which also refines crude to produce fuels, expects oil prices to decline further this quarter, it said in a statement on its website yesterday. Lower rates would reduce its earnings from oil sales and cut the value of its product inventories. The company said those stockpiles remain high.

    The view on the oil price in CNPC’s statement echoes that of Nomura International Hong Kong Ltd., which said yesterday that U.S.-traded crude has the potential to drop below US$70 a barrel by the end of the year if OPEC fails to cut production.

    That would push prices to a level last seen in June 2010, and narrow refining margins in Asia as the value of stockpiles maintained by refiners decline.

    Falling prices could “crush Asian refiners’ margins” if demand for oil remains weak, said Gordon Kwan, Nomura’s Hong Kong-based head of regional oil and gas research. Oil demand growth in China, the world’s second-biggest consumer, is expected this year to be the weakest since 1990 as economic growth slows, Sanford C. Bernstein analyst Oswald Clint said.

    The International Energy Agency last week cut its global oil demand forecast further, saying growth this year will be the weakest since 2009. Lower demand is already narrowing refining margins across Asia. Profit from making diesel in Singapore, a regional benchmark, has averaged US$14.25 a barrel this month, compared with US$16.53 a barrel in October last year and US$18.20 a barrel in January 2014, according to data from PVM Oil Associates Ltd. in London.

    Brent crude in London, a benchmark for more than half the world’s oil, has dropped 27 percent since the beginning of July, the biggest four-month slump since 2008, when a financial meltdown drove it below US$40 a barrel. The price of Brent yesterday hovered just above US$85 a barrel.

    CNPC is the parent of PetroChina Co. PetroChina met forecasts with a 4 percent increase in profit in the first half of this year after it sold natural gas at higher prices, helping offset a 3.4 billion yuan operating loss in its refining and chemicals businesses. (SD-Agencies)