China, the world’s second-largest oil consumer, is propelling the recovery in global oil demand, with consumption reaching 90% of pre-pandemic levels, according to analysts at a global information provider. Global oil demand is expected to accelerate once other countries’ travel restriction easing and stimulus packages manage to resuscitate their economies.
Meanwhile, an international consultancy firm projected that China’s oil demand would grow 2.3% to 13.6 million in the latter half of the year. It said gasoline demand would increase 3% year-on-year to 3.5 million bpd in the third quarter, while diesel use would rise 1.2% year-on-year to 3.4 million bpd. The International Energy Agency (IEA) estimated China’s oil demand in H2 would fell to 13.2 million bpd, 5% lower than a year earlier.
Other analysts have different estimates in terms of degree and duration of China’s oil demand recovery after the coronavirus pandemic. However, the general views suggest that both gasoline and diesel consumption in the country will accelerate as people and businesses return to normal activity. Such optimism has helped to support oil prices recently, with Brent LCOc1 and US WTI CLc1 rallying 50% and 90%, respectively, since May 1.
South Korea, Australia, and Vietnam are expected to follow suit soon as they manage to keep COVID-19 cases broadly under check. Fuel demand in India, the world’s third-largest oil consumer, recovered ahead of the lockdown lifting in June, driving an increase in throughput by state refiners. Gasoline demand in Japan, the world’s No. 4 oil user, is expected to shrink 10% in Q4, but it will be a robust rebound after a deep contraction of 27% in Q2. Asia’s overall demand for refined products is expected to increase from 31.6 million bpd in H1 to 34.3 million bpd in H2, but it will be 1.5 million bpd lower from H2 last year.
Fuel demand in the US is forecast to increase by 22% from H1 to 10.6 million bpd in H2. However, gasoline consumption will still be 5% lower than a-year-ago level dragged by the rising unemployment rate. This year’s summer driving season is expected to provide a significant near-term boost to US fuel demand.
