China’s fuel demand has fallen sharply since the outbreak of the coronavirus. The Chinese government quarantined cities and prohibited traveling between the municipalities. Some estimates indicate that fuel demand in the country fell below 4 million barrels per day.
Nonetheless, China’s crude oil imports are expected to drop just 160,000 barrels a day in February from January.
China’s crude oil imports, the world’s largest oil importer, will be lower in March than February. Most oil contracts for February were closed and were on their way to China despite falling demand due to the spread of the coronavirus.
However, China will have the lowest crude oil imports in March this year. Another reason could be the refining and maintenance of the refineries in winter and summer.
Saudi Arabia, the world’s largest oil exporter, has cut its oil exports to China by at least 500,000 barrels a day in March due to declining demand for refineries amid the spread of the coronavirus.
Can China Effectively Control the Spread of the Coronavirus in March?
If China can effectively control the spread of the Coronavirus in March, fuel demand will rise again in April.
Many factors are driving China’s lower crude oil imports in March, but there are reasons to believe that crude oil imports will not fall.
Demand has indeed fallen sharply. All organizations and analysts, including the IAEA, the US Energy Information Administration, and even OPEC, have lowered their projections for growth in oil demand for 2020 to between 230,000 and 400,000 barrels per day.
Global oil demand was promising before the outbreak of the coronavirus. The expected rise was due to the First phase trade agreement between China and the US. Analysts had a brighter outlook on the world economy. Yet, after the outbreak of the virus, they have downplayed the perspective. With the possibility of the coronavirus spreading and spreading outside China, markets fear a severe blow to the world economy.
However, analysts assume that if China can effectively control the spread of the coronavirus in March, fuel demand will rise again in April.
March will be the weakest month for China’s crude oil imports. Refineries cut fuel production because of low demand.
The weakest month for China’s crude oil imports will be March this year as refineries cut fuel production amid low demand.
The outbreak of the deadly virus coincided with the Chinese Lunar new year holidays in late January. Millions of Chinese return home to celebrate it with family members and friends. The virus restricted travel, and it had a significant impact on oil demand in China. The country was over fueled.
Travel restrictions and declining economic activity reduced China’s demand by 4 million barrels a day. However, the decline does not make China’s crude oil imports sharply lower. China is the world’s largest engine of oil demand growth. If it can soon prevent the spread of the coronavirus and provide the necessary economic stimulus, crude oil imports will peak again by the end of March, analysts say.