China reported a 9.8 percent decline in its crude oil output in the month of September, its second -biggest year-over-year decline in oil on record.

The decline is mainly due to oil producers shutting down their inefficient wells to curtail costs. The country had reported a 9.9 percent decline in the month of August this year.

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According to data released by the National Bureau of Statistics, domestic crude output for the month stood at 15.98 million tonnes (3.89 million barrels per day). This is close to the lowest levels on a daily basis in six years. The data shows that the decline is due to cuts in oil fields spendings. The other reason is the closure of older wells.

The decline is likely to level the demand and supply imbalance in the international crude market. Oil prices have shown robust recovery this year. However, they remain more than 50 percent lower than their mid-2014 levels. 

China is currently looking to adjust its oil output by reigning in its "inefficient output."  According to China National Petroleum Corporation President Wang Yilin, such steps are likely to be taken in the fourth quarter. One of the corporation's units in the upstream segment, Sinopec Oilfield Services Corp. projected its net loss for nine months at $1.3 billion. The loss is mainly due to sectoral weakness and falling prices.

China increased its imports of crude oil to make up for the fall in domestic output. It is also expanding its strategic reserve storage capacity.

TagsNational Bureau of Statistics, China National Petroleum Corporation, Sinopect Oilfield Services Corp.