China oil demand plunges 20% on coronavirus lockdown
Singapore - Chinese oil demand has dropped by about 3mn barrels a day, or 20 per cent of total consumption, as the coronavirus squeezes the economy, according to people with inside knowledge of the country’s energy industry.
The drop is probably the largest demand shock the oil market has suffered since the global financial crisis of 2008 to 2009, and the most sudden since the September 11 attacks. It could force the hand of OPEC and its allies, which are considering an emergency meeting to cut production and staunch the decline in prices, which are headed for the lowest close in four months.
“It is truly a black swan event for the oil market,” said John Kilduff, a partner at Again Capital LLC in New York.
Crude futures fell to oneyear lows on Monday as traders reacted to the magnitude of the health crisis in China. Brent, the global oil benchmark, dropped 0.3 per cent to US$56.45 a barrel as of 11.37am in London. West Texas Intermediate declined as much as 2.2 per cent, but recovered to trade 0.3 per cent higher at US$51.71. China is the world’s largest oil importer, so any change in consumption has an outsize impact on the global energy market. The country consumes about 14mn barrels a day -equivalent to the combined needs of France, Germany, Italy, Spain, the UK, Japan and South Korea.
Beijing has locked millions of people in quarantine and the New Year holiday has been extended.