China Oil demand could face headwinds: Barclays

2014-04-08

China Oil demand is expected to face headwinds as economy struggles to overcome a slowdown amidst targetted stimulus measures by the government in the past weeks, according to Barclays.

China’s implied oil demand (refinery throughput and net product imports) reached a record 10.6 mb/d in February, up 12% m/m and 4.3% y/y. Combined demand in the first two months, which helps smooth over the volatility due to different Chinese New Year holiday schedules each year, was still down 2.7% y/y. This m/m pickup was an encouraging sign after a very weak January.

Barclays notes that February witnessed a decline in gasoline demand by 3% and diesel by 6.6% amidst raised runs by refineries. Gasoline stocks rose 10.4% m/m while diesel stocks rose 20.5%.

Holiday slowdown was more brutal than in previous years while other indicators exports, PMI and industrial production coupled with tight conditons weren't favourable for demand to pick up.

Economic conditions are likely to improve as Q1, 2014 is likely to be the nadir for the Chinese economy. Government has promised funding for railways projects, social housing. Second quarter is peak season for export orders and investment.

Source from : Commodity Online

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