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Chinese long-term oil

demand in question

The country has propped up international oil prices in recent years,
but it may lose the ability to do so in the not too distant future

COMMENTARY CHINESE demand has propped up interna- average of 5-6% per year over the next five years,
tional oil prices ever since they collapsed in 2014, but this is still below 2019’s 6.1% growth. This
with this year proving no exception. reflects the ongoing evolution within the Chi-
WHAT: The market has looked to Chinese buyers nese economy, as it moves ever more to con-
China’s motor fuel in recent months to help stabilise prices amid sumer and services driven growth.
demand may peak by a market glut caused by a once-in-a-100-year CPPEI said it expected gasoline demand
2024. health crisis and a squabble in March between growth to average 1.1% per year under a mod-
the world’s two largest exporters – Saudi Arabia erate scenario before peaking in 2024. Diesel
WHY: and Russia – over production quotas. demand, meanwhile, will decline by 2.2% per
The oil intensity in the New analysis from both inside and outside year. Jet fuel demand is projected to rebound
Chinese economy is China, however, suggests that the oil market by an average of 12.5% per year over the fore-
falling. can ill afford to count too heavily on Chinese cast period.
demand in the mid-term and long term. New energy vehicles (NEVs) are also likely
WHAT NEXT: to place downward pressure on oil demand,
Declining Chinese oil Peak predictions CPPEI said, noting that this and the conditions
demand spells lower The country’s fuel demand could peak within the mentioned would likely see Beijing relax its grip
long-term prices. next four years, according to the research divi- over the oil product market. It noted that the
sion of China’s largest oil and gas company. central government was likely to adopt more of
China’s demand for gasoline, diesel a supervisory role when it came to setting prices
and jet fuel could peak by 2025, the China at the pump, content to let the market to signal
Petroleum Planning and Engineering Insti- pricing. As competition ramps up, however, the
tute (CPPEI) said in its 14th five-year out- state majors will have to adapt more quickly and
look, Argus Media reported on September improve their product procurement systems.
24. CPPEI is a unit of state-owned China
National Petroleum Corp. (CNPC). Demand outlook
CPPEI has said it expects demand to grow by Independent research group the Oxford Insti-
just 0.9% per year on average between 2021 and tute for Energy Studies (OIES), meanwhile, has
2025, pointing to the gradual reduction in oil warned that it too expects Chinese oil demand
intensity in the Chinese economy. The research to grow at a slower pace than might otherwise
unit noted that oil intensity fell 12.5% year on be expected.
year in 2019 to 310 tonnes per CNY100mn The group said China’s oil demand was antici-
($14.65mn) of GDP. Last year’s decline was pated to increase by 3-4mn barrels per day over the
much higher than the average annual drop of next two decades from 14.1mn bpd, which is itself
6.4% recorded in 2000-2019. 4.7mn bpd higher than two decades ago. Since the
At the same time, China’s economy may turn of the century China has accounted for one-
recover from a projected 3% this year to an third of global oil demand growth.

P10 www. NEWSBASE .com Week 38 24•September•2020