China’s low-gear economy dims global outlook for oil

China’s struggle to kick start its stuttering economy has spawned forecasts of weaker fuels consumption during the rest of this year, darkening the global demand outlook for oil.

The Asian powerhouse’s diesel usage may fall 5.6% year-on-year in the second half of 2024, following a 4.2% drop in the first half amid weaker logistics and infrastructure spending, according to Mysteel OilChem.

Overall oil-products consumption in the world’s biggest importer may decline 3.8% in the second half with gasoline and diesel demand both lower, according to China Petrochem, citing researchers from the China Petroleum Planning and Engineering Institute. The nation’s apparent oil demand fell just over 8% to 13.66 million barrels a day last month, according to data compiled by Bloomberg.

Those assessments echoed the most recent International Energy Agency monthly market report, which found that global oil demand growth slowed to its weakest in more than a year last quarter with the post-pandemic rebound in China fading.  

As ever though, not everyone is pessimistic. Global demand remains robust, with consumption averaging 103.6 million barrels a day in the July 1-24 period, 1.7 million higher than year-ago levels, according to JPMorgan Chase & Co.

All eyes are now turning to the OPEC+ alliance, which is due to assess the state of the markets on Aug. 1. Oil-watchers are divided over whether the group, led by Saudi Arabia and Russia, will proceed with plans to boost supplies, though it’s as yet unclear whether and when any shift in position may emerge.