Oil product demand in Asia will grow by about 380,000 bpd this year, S&P Global Platts Analytics said this week. This is the lowest demand growth rate since 2009, the firm noted, and a sizeable decline from last year's 780,000 bpd.
As every other economic forecast for the region, the coronavirus outbreak is to blame. It has already slashed crude oil and fuel demand in China, where it started, and now that it has spread across the continent, it is having the same effect on a larger scale.
"Global growth is set to take a hit as China's demand is severely impacted by the outbreak of coronavirus, coupled with much warmer-than-normal winter weather in the Northern Hemisphere," the report said. "As a result many factories in China remain closed or are running below capacity. As factories around the world rely on Chinese products, much lower production and fewer shipments from China have been disrupting global trade and supply chains already. This in turn has been leading to a negative impact on oil demand in other countries."
The coronavirus struck just as China increased oil product export quotas on the back of expectations for stronger demand for fuels at the end of last year. The first batch of quotas was 53 percent higher than a year earlier, at 28 million tons, and came at the end of a year during which refiners-state and private alike-processed crude at record rates of close to 13 million bpd.
Now, in the third month of the outbreak, refiners have slashed run rates to the lowest in six years, at some 10 million bpd, and the duration of the cuts yet unclear. Meanwhile, subdued fuel demand at home led to higher oil product exports, Reuters reported earlier this week. Even with this increase, the oil product surplus for the first quarter could reach 27 million tons, according to CNPC.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More