LAUNCESTON: Asia’s imports of crude oil ticked up slightly in November, led by a recovery by top importer China, but arrivals are still on track to be weaker this year than in 2023.
The top crude-buying region is forecast to import 26.42 million barrels per day (bpd) in November, up marginally from October’s 26.11 million bpd and 26.24 million bpd in September, according to data compiled by LSEG Oil Research.
The ongoing run of soft monthly imports in Asia is likely to weigh on OPEC+’s deliberations this weekend, with the market expecting that the exporter group will once again delay its planned increases in output.
Despite the small November rise, Asia’s crude imports are still likely to fall in 2024, confounding forecasts of increasing demand made by groups such as the Organization of the Petroleum Exporting Countries and the International Energy Agency.
For the first 11 months of the year, Asia’s crude imports were 26.52 million bpd, down 370,000 bpd from the 26.89 million bpd tracked by LSEG for the same period in 2023.
The decline in imports stands in contrast to OPEC’s most recent forecast for Asia’s oil demand to expand by 1.04 million bpd in 2024 from the previous year.
The exporter group’s November market report said China would increase its demand by 450,000 bpd, while the continent’s second-biggest importer India would see a rise of 250,000 bpd and the rest of Asia kicking in with 340,000 bpd.
OPEC has been cutting its forecasts for Asia’s oil demand growth every month since July, when its report estimated Asia’s demand would expand by 1.34 million bpd in 2024.
The main reduction in OPEC’s forecasts has been in China, where the group has gone from expecting 2024 demand to lift by 760,000 bpd in the July report, to forecasting a gain of 450,000 bpd by November.
While China’s November crude imports are expected by LSEG to come in at a three-month high of 11.62 million bpd, the world’s top importer is still on track to record lower arrivals this year.
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For the first 10 months of 2024 China’s crude imports were 10.94 million bpd, down 3.7%, or 420,000 bpd from the same period in 2023, according to calculations based on customs data.
While OPEC and other forecasters are gradually catching up to the reality of China’s weak crude imports, the market pricing has reflected the dynamic for some time.
Steady prices
Global benchmark Brent futures have been trending weaker since reaching the high so far this year of $92.18 a barrel on April 12. They dropped to a 33-month low of $69.19 a barrel on Sept. 10 and have traded largely sideways since then, ending at $72.83 on Wednesday.
When there have been spikes higher in the price, it’s usually been driven by reports of escalating geopolitical tensions in the Middle East and between Russia and Ukraine, rather than by any shift in the supply-demand fundamentals.
It’s those fundamentals that will be front of mind for members of the OPEC+ group when they hold a meeting on Dec. 1.
The group, which brings together OPEC and allies including Russia, is expected to again delay a planned increase in output.
OPEC+, which pumps about half the world’s oil, had planned to gradually roll back oil production cuts with small increases over many months in 2024 and 2025.
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But the soft demand in Asia, and especially in China, has put the kibosh on those plans and analysts now expect any increase in output only to happen after the first quarter of next year.
The views expressed here are those of the author, a columnist for Reuters.
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