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Wednesday, October 17, 2018

HIGH OIL PRICES SLOWING DOWN ASIAN OIL IMPORTS?

Petroleum Intelligence Weekly questions whether the high oil prices are about to slow down the Asian oil imports this year.

Asian oil demand growth is forecast to be between 0.7 mbd and 1.0 mbd. However, of the four biggest consumers, only China is showing signs of growth in the first four months of this year.  Shell’s oil products Managing Director Paul Skinner is the most bullish, seeing 1.0 mbd added to Asian oil demand in 2000. Caltex counts on an 0.8 mbd increase and BP Amoco sees a 0.7 mbd hike.  Asian demand rebounded to a new record of 19.94 mbd in 1999, after falling by 0.4 mbd in 1998.

Most uncertainty is connected to China, which is forecast to increase demand by 6% or 0.25 mbd in 2000 compared to 4.32 mbd oil consumption last year. However, through April apparent demand was some 4.9 mbd, a puzzling 17% year-over-year increase. Lack of data on underlying demand and inventories creates uncertainty. Beijing is also believed to be worried about the outflow of hard currency, and may revisit plans to build strategic crude oil reserves. China imported 1,9 mbd in April.

Asia’s three other locomotives; S Korea, India and Japan also show sign of weakening demand. Indian oil demand has been dented by draught and sharp hikes in domestic prices of transportation fuel. Consumption through April appears to have increased by only 1.3% (0.026 mbd).  S Korean demand was supposed to increase by 7% this year, but fell in April and March and is up by only 1% through the first 4 months of the year. Japanese demand is off by 3% through April a fall of 0.17 mbd.

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