Based on the most recent economic and trade data, China’s oil demand recovery occurred in the first quarter, with demand at 15 million b/d and back to early 2022 levels—just before stringent lockdowns hit Shanghai. In the future, we expect moderate growth based on seasonal trends and a continued recovery in jet fuel, with total demand reaching 15.7 million b/d in the fourth quarter.

Refinery throughput will fall in the second quarter, as an average of 1.4 million b/d of crude distillation capacity will go offline due to maintenance plans by the state as well as independent refiners.

Our fundamental outlook suggests a tight second quarter, with the combined surplus for gasoline, diesel, and jet falling by nearly two-thirds from the first quarter, illustrated by the blue bars in the chart. This is just half of the past few years’ historical averages (gray shade). The red line shows actual exports of the three products (led by diesel) in January-March, which grew by 640,000 b/d year-on-year. We expect China’s fuel exports to be cut by half in the second quarter due to the tightened product balances.
Source: ESAI Energy