India’s oil demand growth is expected to exceed China’s this year, according to commodity trader Trafigura Group.
“We would be constructive on Indian demand,” said Trafigura Chief Economist Saad Rahim at the APPEC conference by S&P Global Commodity Insights on Monday as seen in a Bloomberg report. “This year, Indian demand is set to outstrip China’s, if you exclude strategic stockpiling,” he added.
India versus China
China and India remain the region’s largest crude importers and key drivers of global demand growth. India’s consumption is being supported by urbanisation and rising incomes, while China’s demand growth is slowing outside of petrochemicals.China’s overall consumption growth this year has been supported by stockpiling in both commercial and strategic reserves. This accumulation has contributed to firm global crude prices, even as Opec+ members restored capacity, including an additional increase over the weekend.
Stockpiling and market outlook
Frederic Lasserre, global head of research and analysis at Gunvor Group, said China has been adding around 200,000 barrels a day to stockpiles in recent months, including during refinery maintenance season.
“Today, China is willing to stockpile and increase their SPRs,” he said, referring to strategic petroleum reserves. However, he noted the pace is unlikely to continue over the long term and China may not be able to absorb all of the anticipated surplus.
Looking ahead, Rahim told Bloomberg that demand drivers are less clear going into next year, while more supply is set to reach the market.
“Is there enough demand to absorb this?” he asked. “We’re talking about — next year — just under a million barrels a day of demand growth. Unless you’re talking about double that, just on the demand side, it’s really very hard to see”.
