China: Reopening economy points to surge in oil demand

Hot Charts

Economics and Strategy

January 24, 2023 (Vol. XXIII, No. 4)

Commodity Watch

By Stefane Marion

Despite a significant slowdown in economic growth expected in OECD countries, we remain comfortable with our forecast of WTI between $70 and $80 in 2023. For one, supply considerations due to the war in Ukraine are likely to persist for the foreseeable future. For another, crude oil demand will be supported by China's recent announcement to end its zero-covid policy and reopen its economy. As today's Hot Chart shows, Chinese crude oil imports by volume collapsed by 10% between 2021 and 2022 and are currently 20% below their pre-covid trend. As Chinese consumers emerge from their recent state of hibernation, expect crude oil imports to jump. As a result, we remain comfortable with an overweight in energy in our equity sector rotation.

China: Reopening economy points to surge in oil demand

Chinese volume imports of crude petroleum

620	Million of metric tons (12-month MA)
600
580		With the reopening of the
560		Chinese economy, expect
		a surge in oil demand and
540		a revival of volume imports…
520
500
480
460							…which are
440							currently 20%
						below the pre-
420							covid trend
400
380
360
340
320	2016	2017	2018	2019	2020	2021	2022	2023

NBF Economics and Strategy (data via Refinitiv)

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