A rebound in crude oil demand as the Chinese economy returns to normal operation pushed crude oil throughputs at refineries higher by 3.3% over the first two months of the year.
At an average of 14.36 million barrels daily, per Reuters, Chinese refinery throughputs in January to February compared with 13.98 million bpd for the first two months of 2022 and 14.1 million bpd for December 2022.
Because of a rebound in economic activity, many expect demand for crude oil in China to surge to new record highs, driving record imports, too.
Reuters reported recently, quoting analysts, that the record demand level would be the result of renewed travel after years of lockdowns, combined with new refining capacity coming on stream.
Wood Mackenzie, FGE, Energy Aspects, and S&P Global Commodity Insight, which Reuters polled, expect demand for oil in China to rise by between 500,000 bpd and 1 million bpd this year. According to an Energy Aspects analyst, half of that will come from increased demand for gasoline and jet fuel as travel rebounds.
Demand for diesel is also seen rebounding but more slowly as it is tied to manufacturing activity and this will take longer to recover from the lockdowns than travel, FGE, and Energy Aspects analysts explained.
China’s crude oil imports averaged 10.4 million barrels per day in January and February, down by 1.3% compared to the same months in 2022, according to official Chinese data in tons estimated in barrels by Reuters’ Asia commodities and energy columnist Clyde Russell.
The imports were also below the more than 11.3 million bpd of oil imported in November and December last year. Yet the first two months of 2023 were when the Chinese celebrated the Lunar New Year, which is traditionally a period of subdued demand for crude oil.
China has announced it expects economic growth of 5% this year and while this was at the lower end of analyst expectations, it is still a much higher growth rate compared to European or North American economies and will likely contribute to a substantial increase in demand for oil.