Are Oil Prices Still Too High? | OilPrice.com

Are Oil Prices Still Too High? | OilPrice.com:

China’s oil demand growth is expected to slow dramatically this year, a trend that should have a substantial impact on the global oil market.

CNPC said that oil demand in China will expand by 2.4 percent in 2020, less than half of the 5.2 percent growth rate seen in 2019, as reported by Bloomberg. That will also be the weakest growth rate since the global financial crisis a decade ago. “Negative impacts on the economy from U.S.-China trade frictions won’t be rooted out in the short term,” CNPC said.

At the same time, China has amassed an enormous strategic oil reserve in the last few years, growing from 191 million barrels in 2015 to as much as 800 million barrels last year. China’s import demand was bolstered by this stockpiling; should it slow down or cease altogether it would amount to another knock on demand.

Demand for gas is also expected to deteriorate to a four-year low.

CNPC expects gas demand to grow by 8.6 percent, down from 9.6 percent last year. Meanwhile, China’s domestic gas production is expected to increase, by 8.2 percent, year-on-year. China recently surpassed Japan as the world’s largest buyer of LNG, so the deceleration in demand and the increase in domestic supply will act as a drag on the already-weak LNG market.