Asia’s crude oil imports dropped to the lowest in two years in July as demand remained weak in top importer China and eased in number two India.
According to data compiled by LSEG Oil Research, 24.88 million barrels per day (bpd) arrived in July in Asia, the world’s biggest oil-importing region. This is down 6.1% from the previous month and the lowest daily level since July 2022.
For the first seven months of the year, Asia’s imports averaged 26.78 million bpd, down 340,000 bpd from the same period in 2023.
The ongoing weakness in Asia’s oil imports undermines forecasts for robust growth for the region’s oil demand from leading exporter group the Organization of Petroleum Exporting Countries (OPEC).
OPEC’s July monthly oil market report stuck to the group’s forecast that world oil demand will rise by 2.25 million bpd in 2024, led by an increase of 760,000 bpd in China, supported by a gain of 230,000 bpd in India and a further 350,000 bpd for the rest of Asia.
The International Energy Agency (IEA) has diverged from OPEC’s view in its recent analysis, forecasting on July 11 that global oil demand growth will by 970,000 bpd.
However, the IEA forecast expects China to account for about 40% of the global increase in crude demand, which is about 388,000 bpd.
While imports are only one component of demand growth, the others being domestic production and potential inventory draws, it’s fair to say that China’s imports are tracking nowhere near the IEA’s forecast and are an ocean away from OPEC’s.
If LSEG’s estimate of China’s imports of 10.53 million bpd for July is confirmed in official trade data expected next week, it would mean arrivals of around 10.98 million bpd for the first seven months of the year.
This is down 240,000 bpd, or about 2.1%, from the customs data of imports of 11.22 million bpd for the first seven months of 2023.
Far from growing, China’s demand for imported crude is slipping, meaning a dramatic turnaround will be needed for the remaining five months of the year to reach even the modest forecast for demand growth from the IEA.
Source: Reuters
