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OPEC has reduced its forecast for China's crude oil demand growth in 2024 for the third consecutive month, now expecting an increase of 580,000 barrels per day (bpd). The revised estimate is lower than September's 650,000 bpd forecast and July's 760,000 bpd prediction. China's oil imports have consistently fallen, with customs data showing a decline of 2.8% in the first nine months of 2024 compared to the same period in 2023. Despite an uptick in domestic oil production, the overall supply still lags behind the decrease in imports. The surplus oil available for storage has risen by 300,000 bpd compared to last year.

Key Highlights

# OPEC lowered China's 2024 oil demand growth forecast to 580,000 bpd.

# China's crude imports dropped for the fifth consecutive month in September.

# Year-to-date imports are down 2.8% compared to the same period in 2023.

# Domestic oil production increased to 4.29 million bpd in 2024.

# China's surplus oil for storage rose by 300,000 bpd year-over-year.

OPEC's latest report has cut China's crude oil demand growth estimate for 2024 to 580,000 bpd, marking the third consecutive downward revision. This new figure is a significant reduction from the 760,000 bpd forecasted in July. The adjustment reflects the reality of declining imports, as China's crude arrivals fell by 0.6% year-over-year in September, reaching 11.07 million bpd. The latest data marks the fifth straight month of decreasing imports, leading to a year-to-date decline of 2.8%, compared to the same period in 2023.

Supporting the lower demand outlook, China has ramped up domestic oil production, reaching 4.29 million bpd in the first eight months of 2024. However, this increase of 70,000 bpd still falls short of compensating for the reduced imports. China's oil sector has seen a surplus, with oil available for storage reaching 1.11 million bpd, 300,000 bpd more than the same period last year.

Other factors influencing China's oil demand include strategic stockpiling and variations in refinery activity. While the country’s storage activities have increased, OPEC's demand outlook remains significantly more optimistic than the market trends suggest. The organization may need to further adjust its expectations if the current import and production dynamics continue.

Finally

OPEC's revised forecast for China's oil demand still appears optimistic, given ongoing import declines and modest domestic production growth.

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