Article content
(Bloomberg) — China will see oil demand growth slowing next year, casting a pall over an already disappointing global picture for 2024, as the impact of pent-up appetite for travel and consumption following a three-year pandemic begins to fade away.
The world’s top crude importer will consume an additional 500,000 barrels a day next year, according to the median of estimates from 11 industry consultants and analysts surveyed by Bloomberg — less than a third of the increase seen in 2023. Petrochemical feedstock such as naphtha, and liquefied petroleum gas, or LPG, should account for most of the rise, along with jet fuel. Transport fuels such as gasoline, by contrast, are expected to become less significant as the electric-vehicle fleet grows.
Article content
The prospect of less-impressive Chinese consumption is already casting a long shadow. The International Energy Agency, in its November monthly report, said oil demand growth had been supported by “a narrow set of non-OECD countries, led by China” in 2023 — but it projected a sharp deceleration for the world in 2024 with a market surplus on the horizon, even with deeper production cuts from OPEC and its Russia-led allies.
China accounted for 75% of this year’s increase in global demand, according to the IEA. But the post-Covid lift in the world’s second-largest economy is easing at a time when the world’s growth prospects look bleak, and a crude glut is washing over the market. US exports are nearing a record of 6 million barrels a day, weighing on prices.
“The pandemic story for China’s oil demand recovery is basically over at the end of this year going into next. This year’s oil demand growth at over 10% will never be repeated,” said Li Ran, China oil market analyst with China National Petroleum Corp.’s Economics & Technology Research Institute, speaking on the sidelines of a conference in Beijing.
Article content
Jet fuel may see the strongest growth among oil products, Li said, but a sluggish economy will weigh on gasoline and diesel.
Read more: China’s Oil Demand Outlook Is Worsening as Winter Approaches
China’s drivers are going green in large numbers: electric vehicles accounted for a quarter of all new passenger car sales there in 2022, a figure that rose to almost 38% of the total in October.
“2024 can be seen as the starting point for a structural slowdown in China’s demand, with the biggest components, such as gasoline and diesel, losing momentum,” said Mia Geng, analyst with oil and gas consultancy FGE.
Ranice Tan, research analyst at consulting firm Wood Mackenzie Ltd, said naphtha would support growth, expanding 13%, while LPG demand would increase by 8% in 2024, thanks to extra capacity in propane dehydrogenation, or PDH, used in the production of plastics and synthetic fibers.
—With assistance from Yongchang Chin and Sharon Cho.
Share this article in your social network
