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Page added on October 5, 2017

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China’s Oil Demand Is Far Ahead Of Last Year’s Pace


OPEC recently released its Monthly Oil Market Report which covers the global oil supply and demand picture through July.

OPEC crude oil production decreased by 79,000 BPD in August to average 32.8 million BPD. This marks the first OPEC production decline since April and was primarily driven by sizable outages in Libya.

The cartel revised global oil demand growth for 2017 upward by 50,000 barrels per day (BPD) to 1.42 million BPD. The group reports strong growth from the OECD Americas, Europe, and China. Global oil demand for 2018 is expected to grow by 1.35 million BPD, an upward revision of 70,000 BPD from the previous report. Growth next year is expected to be driven by OECD Europe and China.

China’s oil demand rose by 690,000 BPD in July, marking a 6 percent year-over-year (YOY) increase. China’s total oil demand reached 11.67 million BPD in July. Year-to-date data indicates an average growth of 550,000 BPD, more than double the 210,000 BPD growth recorded during the same period in 2016.

China’s gasoline demand was higher by around 0.10 million BPD YOY, driven by robust sports utility vehicle (SUV) sales, which were around 17 percent higher than one year ago. China’s overall vehicle sales in July rose by 4 percent YOY, with total sales reaching 1.7 million units.

The numbers from China are interesting given the constant refrain of weakening Chinese demand. This seems to be wishful thinking based on China’s investments in clean technology. Related: What Really Killed The Oil Price Rally

China is the world’s top market for electric vehicles, and they recently announced that they have started “relevant research” and are working on a timetable for implementation of a ban on vehicles powered by fossil fuels.

That news followed previous announcements by France and the U.K. that they would ban the sale of vehicles powered by fossil fuels by 2040. These countries are making bets that electric vehicles (EVs) will be ready for near universal adoption when these bans go into effect. By making these bets, they are trying to create a self-fulfilling prophecy.

China may indeed join the ranks of countries banning fossil fuel vehicles. This news helps drive the narrative that the age of oil is nearing its end, but China is a long way from reining in its oil consumption growth.

EVs may lag lofty expectations, in which case governments may have to revisit or delay these announced bans. And even if bans and mandates end up having the desired effect, it’s going to take time.

That’s certainly not a knock on EVs. This is not a zero-sum game because the number of drivers is growing. It is possible — and I would argue that it is highly likely — that we will see both explosive growth in EVs for the next decade, and growing oil demand.

By Robert Rapier

5 Comments on "China’s Oil Demand Is Far Ahead Of Last Year’s Pace"

  1. Shortend on Thu, 5th Oct 2017 10:55 am 

    Suppose they haven’t got the message this growth is bankrupting them. Being addicted is so gratifying, especially when it makes ones life easier…
    Next..who gets the rest of the barrel remaining.

  2. Plantagenet on Thu, 5th Oct 2017 12:52 pm 

    Bad news for the climate. Now China is burning too much coal AND too much oil.


  3. mick on Thu, 5th Oct 2017 4:21 pm 

    Where is this peak demand they keep taking about? just another distraction to keep the sheeple fooled me thinks

  4. Jean Paul Getty on Fri, 6th Oct 2017 10:32 am 

    Wait, I thought everyone has been saying that China’s Economy & Oil Demand was crashing?

  5. rockman on Fri, 6th Oct 2017 4:54 pm 

    Jean – And thus the problem with taking any statistic at a point in time (or even a trend line over a period of time) and assuming it can be projected indefinitely into the future. Particularly true about a country’s economy given how many cyclical patterns we’ve seen for many countries.

    Like the old joke about plotting the happiness in a turkey’s life. Day after day just getting better and better. Until 24 Nov at which point any projection turns to crap. LOL.

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