Since China ended its zero-covid policy, traders have been waiting for China’s oil demand to start picking up. Many oil price forecasts for 2023 were based on a significant increase in oil demand from China. Analysts had expected prices to rise to triple digits, based mainly on increased demand from China.
However, oil prices have remained in a range this year, with WTI trading between $72 and $83 a barrel and Brent between $78 and $90 a barrel, as Chinese oil demand has yet to pick up.
Now that China’s COVID wave has peaked, there are signs that Chinese oil demand will soon recover to pre-2020 levels, but not all indicators are so positive.
China has always been a significant buyer of Russian oil, but recently China has increased its purchases of Russian oil.
This cannot be because Russia will cut production in March in an attempt to stockpile, as those purchases should have been ordered before Russia announced plans to cut production. However, China can expect domestic demand to pick up in the coming months, driven by increased economic activity.
More about China’s economy
Economic activity in China is difficult to gauge in January and February because China does not release official data for these months due to the Lunar New Year. However, data on road travel and public transport mobility showed that economic activity is increasing in China’s major cities. Last week, there were far more people on the roads in major cities than at the start of 2023, and more people were using those cities’ subways than before the pandemic.
Restaurant dining, entertainment and shopping also increased, suggesting that China is finally returning to pre-pandemic travel and commerce patterns. This appears to indicate a return of consumer demand for petrol and diesel to pre-pandemic levels.
The mild weather that helped Germany get through the winter without Russian natural gas.
A lot can go wrong, especially if consumers and businesses tire of the conservation habits they learned during a winter filled with blackouts and rational fear, said Mueller, the head of the federal grid agency.