NEW YORK (Reuters) – Shocking news from China as diesel demand plunges by 11% year over year to 3.9 million barrels per day in June, marking the largest drop since July 2021, according to the latest report from the U.S. Energy Information Administration released on Thursday.
WHY YOU SHOULD CARE
The significant decline in fuel demand in China has had a major impact on global oil markets, causing concern among investors who had high hopes for the country’s economic growth potential.
Both the Organization of Petroleum Exporting Countries and the International Energy Agency have revised their oil demand forecasts, with China being a key factor in their adjustments.
IN DEPTH
After reaching record-high diesel consumption levels in China last year, demand has taken a nosedive in recent months, mainly due to the slowdown in the country’s property sector and the increasing use of liquefied natural gas (LNG) over diesel in heavy-duty trucks.
According to the EIA, the rise of LNG-fueled trucks has been significant, with sales soaring by 307% to 152,000 units last year. Consultancy FGE predicts that LNG will continue to displace a substantial amount of diesel demand in China in the coming years.
KEY STATS
Chinese refineries are feeling the pressure, as oil refinery output in July dropped by 6.1% compared to the previous year, marking the fourth consecutive month of decline.
Analysis:
The article highlights a significant 11% drop in diesel demand in China, impacting global oil markets and investor confidence in the country’s economic growth potential. This decline is attributed to a slowdown in the property sector and the increasing use of LNG in heavy-duty trucks. As Chinese refineries struggle with reduced output, it’s clear that the shift towards alternative fuels like LNG is reshaping the energy landscape and may have long-term implications for both China and the global economy.