Doom-laden stories about China’s economy aren’t portraying an accurate picture of energy demand in the top crude importer, according to oil luminaries at a major conference in Asia.
“There’s a lot that’s good about what’s going on in China,” Ben Luckock, co-head of oil trading at Trafigura Group, told hundreds of attendees at the APPEC by S&P Global Commodity Insights in Singapore on Monday. “In terms of China demand, the property market is bad, but the other parts of the economy aren’t.”
China’s crude oil imports were a relative bright spot in the first half, and demand growth is expected to account for 40% of the global total this year. Jet fuel consumption could rise 90% in the second half from a year earlier, according to Sinopec. Beijing is also issuing larger-than-normal fuel export quotas to help juice growth.
Hours after Luckock’s address, veteran oil consultant turned hedge fund manager Gary Ross delivered an even more bullish view on Chinese demand.
There will be a surge in consumption in the fourth quarter, said Ross, chief executive officer at Black Gold Investors. Domestic refinery run rates are likely to remain high, which will boost the country’s crude imports, he said.
The optimism on oil shows how pockets of China’s economy are holding up, despite the overall slowdown in growth. The price of steel-making staple iron ore, for example, has performed relatively well despite a parade of negative headlines on the property sector.
“Gasoline sales have been absolutely astonishing during the summer in China,” Ross said. “People are driving like crazy. And of course the year-on-year comparisons are going to be dramatic.”
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