Crude oil demand from China remained sluggish in April, with imports recording a significant decline. This development is mainly attributed to central interventions by Beijing, which asked refineries to prioritize motor fuels over chemicals, while simultaneously tightening controls on exports.
Although this specific strategy ensured domestic sufficiency, the tepid demand for transport fuels led to a rapid accumulation of gasoline and diesel inventories. As a result, refineries’ incentive to boost their production decreased drastically.
Now, a substantial recovery in demand depends entirely on state policy decisions. Beijing is thus called upon either to relax export restrictions or to allow refineries to operate based on optimal economic efficiency. Until a change in course occurs, Chinese crude markets are expected to remain “trapped” at low levels.
