Chinese fuel demand will continue to expand this year, despite COVID lockdowns and weak economic data for April, says PetroChina, the country’s biggest oil and gas refiner.
"With the improvement of the COVID situation, refined product inventory is now showing a downturn," Reuters quoted Ren Lixin, vice president of PetroChina, as saying during a Friday briefing.
Shanghai is still on lockdown, but COVID case numbers are trending downward, and city officials have indicated that restrictions could be lifted soon but that a ‘zero-COVID’ strategy would remain in force.
While the news has been more optimistic for Shanghai, Beijing is seeing a rising number of cases, though full-on lockdowns have not been implemented so far.
China manufacturing PMI, a barometer for Chinese oil demand, has come in at 47.4 in April’s official data, lower than the previous month’s PMI and lower than analyst estimates, according to CN Wire tweet, but markets may view a more bullish scenario with some districts in Shanghai reportedly achieving “zero-COVID” status.
CN Wire also said on Twitter that six districts in Shanghai had reached zero-COVID standards.
China’s non-manufacturing PMI for April was 41.9, some four points shy of estimates and over six points lower than the previous month’s PMI of 48.4. Composite PMI was 42,7, compared with 48.8 for March.
The Caixin Manufacturing PMI is a key indicator of Chinese economic strength, with April data reaching a two-year low and the sharpest decline since the start of the pandemic in March 2020.
Oil prices, which hit $113 early on Friday, backtracking to $111.6 for Brent at 10:21 a.m. EST, and $108.9 for WTI, have been volatile over the market’s inability to determine whether Chinese demand will decline to the point that it would offset fears of shortage due to Russia’s war on Ukraine and the Western sanctions response.
By Charles Kennedy for Oilprice.com