Slow demand in key Asia marts hinders goal

SINGAPORE: As the global oil market frets about a stubborn supply glut, faltering demand growth in key Asian crude importers is further hampering efforts to restore market balance.

A fuel glut in China, a hangover from demonetisation in India, and an ageing, declining population in Japan are holding back crude oil demand growth in three of the world’s top four oil buyers.

The three countries make up a fifth of 97 million barrels per day (bpd) in global oil consumption, and any hiccups would mean lower-than-expected oil demand growth in Asia, helping to undercut the Organisation of the Petroleum Exporting Countries (Opec)-led effort to support prices.

“We are indeed seeing lower demand from more than a few clients — air, marine, road, industrial. They are consuming less fuel than anticipated,” said Michael Corley, managing director of Mercatus Energy Advisors.

In China, vying with the United States as the world’s biggest oil importer, imports in May were still at a near record of nine million bpd, but a looming cut in refinery operations was set to hit demand for crude oil in the third quarter.

In India crude imports fell by more than four per cent between April and May to 4.2 million bpd.

Coupled with plentiful supplies, the stuttering demand in Asia has contributed to a 20 per cent price fall for Brent crude oil to US$45 per barrel, in what is the biggest slump in a first half of a year since 1997. Reuters

Brent oil price per barrel after a 20pc fall — biggest slump in

a first half of a year since1997