China Oil Imports Pick Up After Slump

China’s crude oil imports rose slightly in July amid a general improvement in commodity imports during that month, Bloomberg reported, citing official data released by Beijing on Sunday.

Crude oil imports stood at 37.33 million tons last month, the data showed, although an increase from a four-year low booked earlier in the year was still lower than they were at the start of the year and a year ago. The total amount is equal to about 8.8 million bpd.

Earlier this month, energy analytics firm OilX estimated that China’s oil imports would pick up modestly in July, seeing them at 9.3 million bpd, or half a million bpd higher than the June average.

The news about China’s recovering oil imports following demand destruction amid Covid lockdowns and economic growth worries immediately prompted a rise in oil prices, coupled with robust export data, also released by Beijing over the weekend.

Even so, oil imports remain weaker than they could be, capping any price gains for the time being as the appetite for the commodity remains restrained. This restraint was probably one of the reasons ANZ revised down its oil demand outlook for this year and next.

For this year, the Australian bank revised its demand outlook down by 300,000 bpd, and for 2023, it cut its forecast by half a million barrels daily.

China’s zero-Covid policy has been behind much of the uncertainty about oil demand, especially after data showed that Chinese refinery run rates had fallen for the first time in a decade during the first half of the year. That’s despite a rise in domestic oil production to an all-time high of 4.18 million bpd in June.

The zero-Covid policy pummeled the Chinese economy during the second quarter of the year, leading to sharp drops in manufacturing activity and consumer spending. The rise in oil imports and the imports of other commodities suggest that a reversal of fortunes may be on the way, although uncertainty remains rife.

By Charles Kennedy for Oilprice.com