SINGAPORE - Chinese oil demand has dropped by about three million barrels a day, or 20 per cent of total consumption, as the coronavirus squeezes the economy, according to people with inside knowledge of the country's energy industry.
Chinese and Western oil executives, speaking on condition of anonymity because they aren't authorized to discuss the matter publicly, said the decline was measured against normal levels for this time of year. It's a measure of the current loss in demand, rather than the average loss since the crisis started, which would be smaller.
Chinese refineries are storing unsold petroleum products such as gasoline and jet-fuel, according to the executives. But every day stockpiles are growing, and some refineries may soon reach their storage limits. If that were to happen, they would have to cut the amount of crude they process. One executive said that refinery runs were likely to be cut soon by 15-20 per cent.
Beyond the headline price for Brent, every other indicator in the physical and derivatives market also points to a weakening market. So-called time-spreads, which measure the price difference between contracts for delivery at different times, have collapsed -- an indication that short-term demand is expected to remain weak.
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Source: The Straits Times - 🏆 8. / 63 Read more »