China has cut oil product export quotas to the nation's four oil majors by 40% in the first round of licences for 2017, Reuters quotes sources as saying. The slashing of quotas doesn't reflect shrinking overseas demand but only reflects a shift in company exporting strategy.

China's majors did not use up the huge quotas issued at the start of last year. China issued allowances for a record 46.08 million tonnes of oil products in 2016, up 80 percent from 2015. In the first 11 months of the year, it exported 43 million tonnes of oil products.

The next round of quotas is expected to be issued during the second quarter and will likely be higher than the first as regional fuel demand for construction and transport picks up after the winter slowdown. China usually releases three or four rounds of quotas a year.

Earlier in December, sources from a China state-owned trading company said that Beijing is likely to stop awarding quotas to  independent refineries. The move was intended to restrict the growth of exports from independent refineries, which will going forward  rely on state-owned trading companies to export oil products in 2017.

The normal trade permissions were expected to be awarded only to the trading arms of Sinopec, CNPC, CNOOC and Sinochem, sources said.