COVID lockdowns raise concerns about the immediate oil demand in the world’s top crude oil importer. China refiners cut April crude runs at scale not seen since pandemic’s early days, OilPrice said.
China’s descent into an almost nationwide COVID lockdown has triggered the first large-scale demand roadblock of 2022, with some 45 cities accounting for 40% of the country’s economic output being under some form of mobility curtailment.
China’s refiners are cutting refinery runs at the biggest scale since the beginning of the pandemic in early 2020, cutting intake by 900,000 b/d in April (equivalent to 6% of domestic demand) as the country continues to grapple with COVID lockdowns, OilPrice reports.
Chinese fuel demand took a sharp downturn in March when worsening coronavirus outbreaks were met by widespread lockdowns, including three weeks of mobility restrictions in Shanghai, China’s largest city, to contain the highly contagious Omicron variant.
The COVID-19 curbs, spanning 28 provinces and including particularly stringent measures among the consumption and manufacturing hubs in the east, hit gasoline demand the hardest, as millions of people were confined to their homes or quarantine facilities. Aviation fuel was also hammered as commercial flights fell nearly 60% in March from a year earlier and last week hit their lowest since 2000, according to aviation data provider VariFlight. Diesel consumption is also declining as trucking activities are impeded by the COVID curbs, which have stranded many drivers on China’s highways and forced factories to shut. State refining giant Sinopec Corp, Asia’s largest refiner, is leading this month’s production cuts, lowering throughput by nearly half a million bpd, followed by an estimated cut of 170,000 bpd by China’s second-largest refiner, PetroChina, analysts and industry sources told Reuters.
Oil demand is expected to average 99.4 million bpd this year, the IEA said on Wednesday, cutting its 2022 demand outlook by 260,000 bpd to reflect the return of severe lockdowns in China. China’s demand, especially gasoline demand, has suffered in recent weeks as authorities continue with their “zero COVID” policy and lockdown large cities and areas to contain a surge in infections. Most recently, China locked down 26 million residents in the financial hub Shanghai, which hit demand as people are confined to their homes, OilPrice said. https://oilprice.com/Energy/Crude-Oil/Chinese-Refiners-Cut-Output-At-An-Alarming-Rate.html