"China's Crude Oil Demand Growth Expected to Slow Next Year Due to Economic Recession"

Bloomberg Outlook
Oil Demand Growth This Year Expected to Reach Only One-Third

There is a forecast that China's crude oil demand growth next year will slow down due to domestic and international economic recessions.

On the 8th, Bloomberg reported that according to a survey of 12 experts, China's crude oil consumption next year, as the world's largest crude oil importer, is expected to increase by only 500,000 barrels per day. This is only one-third of this year's increase in crude oil consumption. Domestic demand and real estate downturns, as well as export declines caused by global economic slowdown, are cited as reasons for the sluggish crude oil demand in China. Global credit rating agency Moody's also raised concerns about the Chinese economy by warning of a prolonged real estate slump and rising government debt on the 5th, downgrading China's credit rating outlook from 'stable' to 'negative'.

This year alone, China accounted for 75% of the global increase in oil demand (International Energy Agency), leading the expansion of oil demand in non-OECD countries. As travel and consumer demand, suppressed by the COVID-19 pandemic, exploded, crude oil demand also increased significantly.

Qi Xiaoming, a senior expert at Sinopec, China's largest refining company, said, "As the COVID-19 pandemic factor disappears, things will return to normal, but the outlook is not very encouraging," adding that next year's crude oil demand will be influenced by the macroeconomy.

China National Petroleum Corporation (CNPC) expects China's crude oil demand to decline to 2019 levels. While demand for jet fuel is expected to increase significantly due to increased cross-border movement, demand for gasoline and diesel is expected to decrease due to economic slowdown. Li Lan, a Chinese oil market expert at CNPC's Economic and Technical Research Institute, forecasted, "It will be difficult for crude oil demand growth of over 10% like this year to be repeated (next year)."

Mia Geng, an analyst at energy consulting firm FGE (Fact Global Energy), predicted, "As the largest oil products such as gasoline and diesel lose momentum, next year will mark the starting point of a structural slowdown in China's demand."

With growing concerns over economic slowdowns in China and globally, international oil prices are declining. West Texas Intermediate (WTI) crude oil reached $93 per barrel in September but has now fallen to the $69 range.