China’s rocky road to recovery
After almost two months of a government-mandated lockdown to stem the spread of COVID-19, China is now gradually returning to work. With expectations of a looming government stimulus, all eyes are on China to support the recovery in oil markets. But China’s crude buying or oil demand may not be as strong as some are expecting (or hoping). In fact, the government’s cautious stimulus program suggests that even though product demand could already start to recover and rise y/y towards the end of Q2 20, demand this year would still be around 0.1-0.25 mb/d lower than 2019 levels. This would be the first contraction in Chinese oil consumption since 1990. And despite some opportunistic crude purchases to fill up domestic oil reserves, both commercial and strategic, crude imports could be flat or even fall from 2019 levels.