Page 7 - AsianOil Week 48 2022

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COVID hits oil demand across China - again

INVESTMENT OIL demand in China has been hit by a new subsequently led to at least one commodity ana-
spike in COVID, with reports of the first deaths lyst at the Australian and New Zealand Banking
COVID-19 measures in over six months sending people onto the Group (ANZ) saying “This remains a headwind
continue to eat into streets of major cities to protest the nation’s for oil demand that, combined with weakness in
Chinese energy ongoing zero-COVID policy. the U.S. dollar, is creating a negative backdrop
demand. In the past week COVID cases across China for oil prices,”
have risen dramatically, soaring from around Since the start of the pandemic in late
32,000 new daily cases a week ago to over 70,000 2019, itself originating in the Chinese city of
on at the end of November. Wuhan, the government in Beijing has officially
For now, however, the impact on oil trading recorded just over 5,200 deaths.
across Asia has been minimal. At least for the Experts believe the real number to be much
time being. higher, but with ongoing lockdowns across
As such, prices posted across China and the larges parts of the nation, the ordinary Chinese
region were higher than expected late last week. public has now had enough.
At first most analysts expected a sudden The problems have only been exacerbated
drop in prices for crude on the back of Chi- by a recent announcement that three deaths
na’s COVID numbers marking a rise in the recorded in Chinese media on November 20th
seven day average from under one thousand were the first in in the country since May.
in late October to almost 40,000 at the end of These deaths and the protests that followed
November. are already causing alarm in the global economy
The delay in prices nosediving has for the with prices now starting to fall.
present been attributed to a delay in European US West Texas Intermediate crude futures
Union authorities agreeing a wider G7-EU price on Monday hit rock-bottom on the year, hitting
cap on any future movements of Russian crude. prices not seen throughout 2022, down 2.9% at
Oil prices are expected to be more signifi- US74.09 per barrel.
cantly affected in the coming weeks though. Brent was similarly affected, down 2.8% to
Social unrest across China is not helping $81.35 per barrel.
either. Markets in Hong Kong and China also fell as
Large scale protests in major cities includ- did China’s currency against the US dollar.
ing Shanghai and the capital Beijing have been According to Yeap Jun Rong, market strat-
broadcast to the wider world as tens of thou- egist at the London based online traders IG
sands of Chinese express their angst regarding Group, “Rising unrest in China in the form
ongoing policies aimed at stamping out the of protests in several cities has translated to
virus altogether. greater reopening pressure for authorities but
This has led to oil analysts across East Asia any indications of reopening seems unlikely to
predicting a drop in implied oil demand to be be guided in light of current record high cases.”
in excess of one million barrels per day (bpd) And with any improvement in oil prices
which in turn will send figures down to the 13 now largely dependent on the Chinese central
million bpd range, even at the same time as Chi- government adopting a more lenient approach
nese government spokespeople deny any unrest to dealing with COVID, “inaction from the
and refuse to answer questions posed my mem- authorities to budge from its Covid-19 policy
bers of the international media. (could) potentially (be) a catalyst for (an even)
Beijing’s head in the sand response has more downbeat mood,” Yeap added. ™

Week 48 05•December•2022 www. NEWSBASE .com P7