Renewed Demand for Oil from China could help Recover Global Oil Price
The level of China’s oil demand has leapt up more than ninety percent of the levels seen before the Coronavirus epidemic hampered the global economy. The rebound in demand is seen as surprisingly strong by economic observers, and there are hopes that many more countries will echo similar increases in oil demand as Coronavirus restrictions ease across the globe.
China, being the second-largest consumer of oil, is currently the statistical outlier in oil demand, though the winding back of travel restrictions in the second half of 2020 could see many more nations back at near pre-Covid levels of demand.
Jim Burkhard, vice president of IHS Markit commented that "The brisk resumption of Chinese oil demand, 90% of pre-COVID levels by the end of April and moving higher, is a welcome signpost for the global economy… When you consider that oil demand in China — the first country impacted by the virus — had fallen by more than 40% in February — the degree to which it is snapping back offers reason for some optimism about economic and demand recovery trends in other markets such as Europe and North America."
The Coronavirus lockdowns seen across the globe impacted and continues to impact many sectors of the global economy, but the toll has been especially dire on oil markets to this point, with prices down around seventy percent by mid-April of this year. Oil was then stockpiled worldwide due to the sudden withering of demand globally.
Economists differ in their opinion on how long this spike upwards in Chinese demand for oil, with some saying it has the potential to surpass last year’s demand, and others saying demand will fall by more than five percent this year.
There does seem to be a consensus that fuel use will continue to rise globally as people once again get back to business and travel as restrictions ease.