(Bloomberg) — China will see oil demand growth slow next year, casting a pall over an already disappointing global picture for 2024, as the impact of pent-up appetite for travel and consumption in the wake of a three-year pandemic begins to fade.
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The world’s largest crude oil importer will consume an additional 500,000 barrels per day next year, according to the average estimate of 12 industry consultants and analysts surveyed by Bloomberg, less than a third of the increase in 2023. Petroleum gas, or liquefied petroleum gas, should account for most Altitude, along with jet fuel. In contrast, transportation fuels such as gasoline are expected to become less important as the electric vehicle fleet grows.
“Next year, growth will return to a normal track as epidemic factors fade. The outlook is not very encouraging,” said Ke Xiaoming, chief expert at Sinopec, China’s largest oil refiner, adding that the fate of oil products is also closely linked to the fate of the economy. Broader: “Petrochemicals are supported by additional capacity, but face weak margins.”
The prospect of less impressive Chinese consumption already casts a long shadow. The IEA, in its November monthly report, said oil demand growth was supported by “a narrow group of non-OECD countries, led by China” in 2023 – but it forecast a sharp slowdown for the world in 2024. With a surplus. On the horizon, even with deeper and longer-term supply cuts by the Organization of the Petroleum Exporting Countries and its Russia-led allies.
China accounted for 75% of the increase in global demand this year, according to the International Energy Agency. Now the post-Covid recovery in the second-largest economy is faltering at a time when global growth prospects look bleak, and a glut of crude oil, especially from non-OPEC producers, is overwhelming the market, driving prices steadily lower. US exports are approaching a record level of 6 million barrels per day. Oil is heading toward its seventh weekly decline, its longest losing streak since 2018.
“This year’s oil demand growth of more than 10% will never be repeated,” said Li Ran, a Chinese oil market analyst at the Economics and Technology Research Institute of the China National Petroleum Corporation, speaking on the sidelines of a conference in Beijing.
CNPC expects Chinese demand to return to 2019 levels. Li said that jet fuel may see the strongest growth among petroleum products, but the slowdown in the economy will affect gasoline and diesel.
Read more: China’s oil demand outlook worsens as winter approaches
Drivers in China are going green in droves: Electric vehicles accounted for a quarter of all new passenger vehicle sales there in 2022, a figure that rose to nearly 38% of the total in October. Rystad Energy analyst Lin Yi said the company expects gasoline to grow just under 4%, with diesel up 5%, partly due to a recovery in the construction sector – but jet fuel will jump 33% as international travel returns.
“2024 can be seen as the starting point for a structural slowdown in Chinese demand, with larger components, such as gasoline and diesel, losing momentum,” said Mia Jing, an analyst at oil and gas consultancy FGE.
Naphtha will support growth, expanding by 13%, while demand for LPG will increase by 8% in 2024, thanks to additional propane dehydrogenase capacity, or PDH, said Ranis Tan, a research analyst at consultancy Wood Mackenzie Ltd. , used in plastic production. And synthetic fibres.
– With assistance from Yong Chang Chen and Sharon Zhou.
(Adds analyst rating and comments in paragraphs 3 and 9 and price in paragraph 5.)
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