China, the world’s largest importer of crude, is the only major buyer expected to see increased oil demand this year as the pandemic destroyed consumption globally. With China’s imports expected to reach 12 million barrels per day (bpd) next year, sellers are lining up shipments to retain market share as worldwide oil consumption is expected to fall by nearly 9% in 2020. Royal Dutch Shell Plc, Russian Lukoil’s trading arm Litasco and Unipec, the trading arm of China’s state-owned Sinopec, have provisionally booked, or are looking to book supertankers to ship U.S. crude from the Gulf Coast to Asia in December, according to shipbrokers and Refinitiv Eikon data. COVID-19 infections are rising worldwide, particularly in heavy fuel users like the United States and Europe.
China was on track to be the only major country to boost its demand for oil year-on-year. It estimates global demand at 91.3 million bpd in 2020, down from 100.1 million bpd in 2019. Lockdowns will probably be in place in Europe for much of this winter. China has raised its quotas and (storage) capacity. It looks like the demand will be centered there in the near future. Trading firms are very active as they expect more requests from China’s independent oil refiners that will buy oil under new import quotas. Oil grades that have higher naphtha yields such as light, sweet U.S. crudes, are in higher demand from petrochemical buyers, one trader with an Asian refiner said. Light grades produce more gas oil, used for heating, which is also in greater demand, versus jet fuel, where consumption has collapsed.