China’s bearish demand outlook weighs on oil prices – analysts

The recent downward trend in Brent’s price can be attributed to a bearish oil demand outlook coming from China, according to oil market analysts.

PHOTO: Oil barrels with China's flag in the background. Getty Images

Chinese refiners processed about 59.07 million mt (13.91 million b/d) of crude oil in August, down 6.2% from the same period a year ago, market intelligence provider JLC reported citing data from China’s National Bureau of Statistics (NBS).

“The market remains concerned about weak demand in China,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

China's latest crude throughput data and tepid oil import numbers have heightened demand growth concerns in the global oil market, analysts said. The country imported 11.56 million b/d of crude oil last month, down from 12.43 million b/d imported in August 2023.

“Chinese data continues to point towards weaker domestic oil demand,” two analysts from ING Bank said. “A reduction in run rates is obviously not great for crude oil demand,” they added.

China processed about 472.53 million mt (14.14 million b/d) of crude in the first eight months of this year, down 4.23% from the same months in 2023, JLC reported.

This bearish outlook for oil demand growth in China has prompted money managers and hedge funds to hold net-short bets on ICE Brent futures for the first time, ING Bank’s analysts said.

By Aparupa Mazumder

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