In an interview with “The Future of Energy” on Al Arabiya TV, Kang Wu, head of the Asia and Global Demand Department at S&P Global, said that China is in the process of recovering after opening up the economy It was partially closed due to the outbreak of the Corona virus last year.
“Everything has returned to normal, but the main thing is expectations. When the market expects China to recover at a certain pace, the market will be optimistic when China will outpace this pace. The market will be pessimistic if China fails to outperform it. The truth is that China is recovering in terms of its economy and sector. energy and in terms of its oil demand,” according to Wu.
He continued: “The Chinese economy is currently recovering at a good pace, but less than the expectations of many analysts and markets that they launched at the beginning of the year. After the first quarter data, the rates for April, May, and until early June came lower than they were, indicating a slowdown in the Chinese economy.” “.
Wu pointed out that the official growth rate in the country during the first quarter amounted to 4.5%, but he indicated that S&P Global Commodity Insights expects the GDP growth rate to be about 5.5%, which means that the Chinese economy should record growth rates comparable to 4.5% in the remainder of the year. General and this also includes the second quarter.
He added, “The demand for oil has a slightly different behavior. Last year, when China’s economy grew by 3%, which is the lowest growth rate in many years, we saw that the demand for oil decreased by about half a million barrels per day. This is not a slowdown, but rather a decline, therefore.” China’s oil demand growth this year is higher than expected due to the significant decline,” he said.
He explained that S&P Global expects Chinese demand to grow between 900,000 and 1 million barrels per day this year, and that only half of this figure is compensation for last year’s decline.
He pointed out that jet fuel performs better than all other types of fuel in China and even in the whole world. Gasoline comes second overall, as the return of commuting, driving and the holiday season all supported the demand for jet fuel, as did the performance of the demand for gasoline.
As for gas oil and other products related to general economic activity, specifically industrial activity and construction, in addition to people’s spending, this area is a source of concern. This is the reason why the Chinese authorities today are considering launching new stimulus packages to support the economy in general.
“The demand for gasoline will return to slightly above the level of 2019, i.e. the level before the Corona pandemic. As for the demand for diesel at the end of this year, it will remain below the level of 2019. But despite this, we still see that China has room to grow its demand for diesel for a few more years.” We expect that diesel will return to 2019 levels by 2024, but after that diesel will not have much room to grow and may peak in 2025. Chinese demand for gasoline will continue to grow for a little while longer.
As for globally, the company expects that the demand for oil this year and next will be led by the Asian region, which will represent about 70% of the 2 million barrels per day of growth that global demand will achieve this year.
Wu added that this year’s growth of 2 million barrels per day will decrease slightly next year to 1.9 million barrels per day. Asia’s share of this growth will also decrease slightly as global economic growth will improve next year. While demand in the United States and Western Europe will improve slightly.
