The nation cautiously emerges from strict virus lockdowns as China's demand for gasoline and diesel is nearing a return to pre-virus levels.
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According to people who have direct knowledge of the nation s energy industry, the overall consumption of major transport fuels was almost 90% of June 2019 levels. After falling in April, gasoline and diesel account for about half of China s total oil demand and fuel use has rebounded steadily.
China s rebound could cause the market's prices to go higher, as well as give a boost to global crude demand. The world's biggest oil importer continues to face sporadic virus outbreaks, and President Xi Jinping has reaffirmed that the nation will stick to its Covid Zero strategy, which relies on lockdowns and mass testing to stamp out infections.
The financial hub may be locked down again after Shanghai resumed mass testing in nine districts after detecting cases the past two days. Infects are also spreading through provinces in the Yangtze River Delta region, home to manufacturers of chips and medicines and solar panels.
The Chinese oil executives, who asked not to be identified, said last month that gasoline demand was at 3.2 million barrels a day, compared with 3.7 million barrels a day in June 2019. They said diesel consumption was 3.5 million barrels a day, compared to 3.8 million barrels a day three years ago.
After the initial outbreak and lockdown in 2020, demand for gasoline and diesel rebounded quickly, bouncing back to pre-virus levels. Since then, flare-ups have tested fuel consumption, a resurgence earlier this year sparked by the omicron variant resulted in strict restrictions in some cities and crashing demand.
According to BloombergNEF, traffic congestion was 9% higher than January 2021 levels in the 15 cities with the highest number of vehicle registrations last month. Figures also indicate a rebound in Shanghai and Beijing, which were recently subject to lock downs.
Over the coming weeks, the pace of gasoline s demand recovery could accelerate as schools break for summer and more people get comfortable with driving across cities, the executives said. They said diesel consumption had been impacted by heavy rain and heatwaves across the nation, affecting construction activity.
There are some signs of improvement for aviation, but jet fuel demand is still below pre-virus levels. Flight departures in June increased more than doubled from the downturn in early April, while the cancellation rate at China's 20 biggest airports also decreased, according to BloombergNEF.
China has cut the quarantine time for inbound travelers by half to seven days, but Chinese officials said the decision was not a sign of reopening and was based solely on the shorter incubation period of the omicron variant.
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