China Diesel Demand Weighing on Oil Prices
OREANDA-NEWS. October 15, 2014. Reuters (6 August) reported that sources at China's major oil companies are predicting that China's 2014 diesel consumption is set to post its first annual decline in more than a decade, and consultancy IHS Cera expects demand to fall 0.4% this year. Recent data supports this view, with Chinese diesel demand down 2.3% YoY in July and down 1.3% in August.
We see this as one of the key concerns for Oil Demand, which has been weighing on oil prices of late.
China's diesel demand has remained at ~3.5mbpd for the past two years, following demand more than doubling from 2002 to 2012. But slowing domestic demand may trigger record diesel exports from China, which could further pressure product prices. China has already exported 2.93m tonnes from January to August this year, as supply outpaced domestic demand growth.
However, although Diesel demand is a good indicator of industrial activity, we note that real diesel demand in China is difficult to measure, given that inventory data for the region is rarely published.
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