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Chinese oil demand is set to grow by 760,000 barrels per day (bpd) this year, OPEC said on Thursday, raising slightly its demand growth outlook for China while leaving global oil demand projections unchanged from last month.
China’s oil demand is now expected to average 15.61 million bpd this year, up by 760,000 bpd year-over-year, OPEC said in its Monthly Oil Market Report (MOMR) today. The latest growth estimate is higher than the 710,000 bpd growth expected in last month’s report.
While raising the outlook on China, OPEC left its global oil demand growth estimate unchanged at 2.3 million bpd for 2023, flagging uncertainties about economic growth, which could be threatened by the ongoing monetary tightening by the Fed and other central banks.
But China has seen a rebound in fuel consumption since the country ditched the ‘zero-Covid’ policy at the end of last year, OPEC said.
“In 1Q23, world oil demand is estimated to have grown by a healthy 2.1 mb/d y-o-y, on the back of a strong rebound in China’s oil demand, as well as solid oil demand data in other non-OECD regions, particularly the Middle East and Asia,” the cartel noted.
The world’s top crude oil importer will lead oil consumption growth in emerging markets this year, according to OPEC.
“Looking ahead, oil demand for most products has been on a strong rebound since abandonment of the country’s restrictive zero-COVID-19 policy. Domestic mobility and air travel in China are at close to 80% of pre-pandemic levels,” OPEC said.
In addition, February data points to the manufacturing and services sectors rebounding after the reopening, OPEC said.
Increased travel will boost demand for transportation fuels, gasoil demand will rise on the back of construction projects, and “a vibrant petrochemical sector” is also set to raise oil demand in China this year, according to OPEC. In the second quarter of 2023, Chinese oil demand is expected to see annual growth of 1.0 million bpd, while growth in the third quarter is also pegged at a solid 800,000 bpd year-on-year.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com