Global oil demand threatened by China’s tight covid lockdowns – Bloomberg

“China’s worst virus outbreak since the start of the pandemic has led to some oil refiners cutting back operations and is forcing analysts to rethink their demand estimates as strict lockdowns curb consumption,” said Bloomberg.

The analytics published during the early Thursday morning in Asia also claims, “The Covid-19 resurgence is posing a threat to global oil consumption and may accelerate demand destruction, helping to rein in bloated prices that soared on Russia’s war in Ukraine.”

Additional quotes

Independent refiners in the key hub of Shandong have been forced to resell crude cargoes and reduce processing as flights are canceled and traffic thins in some of China’s biggest cities.

China has managed to bring previous outbreaks quickly under control since Wuhan two years ago, but the highly infectious omicron variant is challenging the nation’s Covid Zero strategy. 

Crude inventories at 20 sites in Shandong province -- where half of China’s independent refiners are based -- rose over the past two weeks, compared with an overall national trend of falling stockpiles, according to Ursa Space Systems.

The region’s processors have cut operating rates to around 50% of capacity, the lowest in five years excluding 2020, data from OilChem show.

Market reaction

Following the news, WTI crude oil prices pause the previous day’s upside around a two-week high, trading sidelined near $113.70 by the press time.

Read: WTI Price Analysis: Bulls attack three-week-old resistance below $115.00