China’s crude oil demand is expected to weaken in early 2022 due to the uncertainty over the coronavirus Omicron variant and Beijing’s tough probes on emissions and tax issues. Chinese refiners typically replenish stocks during the winter month, anticipating robust demand during the Lunar New Year period. However, China’s zero-tolerance approach toward virus outbreaks continues to impede travel plans.
China’s oil imports are projected to rise marginally year-over-year in January 2022 but will likely soften toward March, analysts said. They predict imports will be about 10.7 million bpd in March 2022, more than 1 million bpd lower than March 2021. Imports this year are already on course to register the first annual decline since 2004.
Chinese authorities are expected to order refiners and factories to cut production to ensure blue sky ahead of and during the Beijing Winter Olympics in February. Market participants said Chinese refiners had been less active in the spot market in recent months as they anticipated this government policy. Beijing’s crackdown on alleged tax violations has also affected independent refiners. Companies found guilty could see their crude oil import quotas slashed or scrapped.
