Oil demand in China has almost returned to its level before the coronavirus pandemic spurred the government to impose lockdowns and shut down industries, Bloomberg reported Monday.
Consumption has rebounded to about 13 million barrels per day, Bloomberg said, citing Chinese energy officials who weren’t authorized to speak publicly on the matter. That isn’t far off the 13.4 million barrels consumed in May, and the 13.7 million in December.
Gasoline and diesel are leading the recovery as manufacturing gears up and commuters opt to drive rather than use public transport, Bloomberg said. Diesel demand is also benefiting from the Chinese government encouraging farmers to plant more to keep the nation fed.
There are also signs of recovery among China’s independent refiners called “teapots,” which account for about a quarter of the country’s total refining capacity. They are processing crude at 75% of capacity, compared to 60% a year ago, Bloomberg said.
On the other hand, demand for jet fuel remains weak as travel restrictions and transmission fears continue to weigh on the airline industry.
Still, the oil industry is likely to welcome the recovery, especially as BP CEO Bernard Looney warned last week that oil demand may never fully return to pre-pandemic levels.
The demand rally in China is helping to shore up global oil prices, which tumbled to record lows last month as the coronavirus pandemic hit fuel usage and the bitter oil-price war between Saudi Arabia and Russia resulted in a supply glut.
Indeed, crude prices in the US briefly turned negative due to limited storage, particularly at a key hub in Cushing, Oklahoma.
Oil has rallied strongly since then. West Texas Intermediate, the US crude benchmark, was up 0.3% at $31.80 at the time of writing, while Brent crude was almost flat at $34.80.