Oil Demand: Some good news

[dan_s]

On April 3 Reuters reported China's top fuel producers are set to raise April crude throughput by a combined 755,000 b/d, or 10% from March, as domestic fuel demand picks up after being hammered by the coronavirus outbreak. The increase, calculated by Reuters based on interviews with six industry sources, shows China bucking the global trend of refiners deepening output cuts to cope with slumping demand amid nationwide lockdowns in the global pandemic. "Chinese fuel demand is rebounding, but only at a modest pace, as resuming (domestic) economic activity was somewhat offset by a steep fall in exports," said Wang Zhao, analyst with commodities consultancy Sublime Information Co. Among fuels, demand for diesel is recovering the fastest as China pumps up spending on infrastructure and as manufacturing recovers, but plunging export orders are capping growth. Gasoline consumption is also recovering, with more cars on the roads as people avoid public transportation, albeit over shorter distances.

On April 2 Bloomberg reported that China is moving forward with plans to buy up oil for its emergency reserves after an epic price crash, according to people with knowledge of the matter. Beijing has asked government agencies to quickly coordinate filling tanks. In addition to state-owned reserves, it may use commercial space for storage as well, while also encouraging companies to fill their own tanks.

On March 31 Reuters reported the Trump administration plans to lease out space for energy companies to store oil in the nation's Strategic Petroleum Reserve, after a previous effort to buy millions of barrels for the emergency stockpile was canceled over a lack of funding, according to two people briefed on the matter. The new plan could help the U.S. deal with a growing glut of crude oil that risks overwhelming commercial storage tanks and sending world energy prices deeper into a tailspin as the coronavirus pandemic slashes demand for fuel. The Strategic Petroleum Reserve has 77 million barrels of free capacity, a little less than the country uses in four days. It currently holds about 635 million barrels of oil in salt caverns on the Texas and Louisiana coasts.