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MNI Commodity Analysis: End of Year China Weakness Weighs on Oil Complex

OIL
  • China was the face of global oil demand growth in 2023 but after a flurry of strength earlier in the year, slowing demand and weak refining margins into the tail end of the year are setting pessimistic tones for 2024 growth.
  • Tight Chinese oil product export quotas into the final quarter of the year and suppressed access to cheap feedstock as well as tightening crude import quotas have created weaker Chinese demand.
  • Both private and state refiners have faced weaker run rates in Q4, pressed by weak margins due to slowing seasonal domestic demand and an inability to export due to tightening quotas. Extra fuel oil quotas appear too little too late.
  • With a lack of pent-up post lockdown demand to return to the markets, Chinese demand is forecast to grow at a much slower rate in 2024 – likely a key consideration for OPEC+ policy for further cuts at its most recent meeting.
Full piece here:

MNI Commodity Analysis - End of Year China Weakness Weighs on Oil Complex.pdf

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