https://youtu.be/OP7_kIz9IuU
- Demand for oil in China is on course to drop by 20% in April, Bloomberg reported Friday.
- China is facing its biggest oil-demand shock since the early days of COVID when Wuhan was the epicenter of the outbreak.
- Economic activity for the world’s largest crude importer has slowed because of a new wave of coronavirus infections.
China’s demand for oil is tumbling in April, as the country battles the latest wave of COVID infections by ordering massive lockdowns that are keeping people inside their homes and limiting industrial output, according to a Bloomberg report Friday. Gasoline, diesel and aviation fuel demand is on track to drop by 20% this month, sources with inside knowledge of China’s energy industry told Bloomberg. They said the decline is the equivalent to a drop in crude oil consumption of 1.2 million barrels a day. That would result in the biggest oil-demand shock in China since lockdowns began more than two years ago in Wuhan, the initial epicenter of the coronavirus outbreak that eventually turned into a pandemic. China is the world’s largest crude importer. Gasoline demand is logging the largest drop. Demand for diesel has slumped from the trucking industry, but there’s some support from the agricultural and industrial sectors. Energy demand is weakening as China tackles its latest wave of COVID infections by ordering millions of people to stay indoors under a zero-tolerance approach. During April, more than half of China’s largest cities were under lockdown measures, according to NPR. Most factories and offices reportedly remained closed in Shanghai, which is China’s biggest city and home to 25 million people. City officials on Friday said they would relax some restrictions on truck drivers to lessen pressure on food supplies and trade, the Associated Press reported. Amid the strict lockdowns, Beijing expects the Chinese economy to expand by about 5.5%, the lowest growth target since 1991. Prices for Brent crude, the international benchmark, and West Texas Intermediate crude each dipped about 0.8% Friday but remained slightly above $100 a barrel. They have climbed by roughly 35% this year largely on the back of supply concerns stemming from the war against Ukraine by Russia, a major oil producer. NN: two points here. The lockdowns will end, so the drop in demand is temporary. Lets say China demand is down 2 million barrels a day. Reality is the market is short 5 million barrels a day at the slowest demand time ot the year. Add strategist stockpile releases of 1.5 million barrels a day. And you can see the market is still short 1.5 million barrels a day. BUT we are coming to peek flying and driving season which will bump demand by 3 million barrels a day and when china comes back its damned will increase by 2 million barrels a day. So anyway you cut it at best the market come July will be short at least 5 million barrels a day. And as more sanaction come to play that shortage could be 10 million barrels a day. That is enough shortage to bring gasoline, diesel fuel and jet fuel rationing…. It should be a summer of fun.