Credit: Visual China

BEIJING, October 7 (TMTPost) – After China lifted its pandemic-control measures, travel demand has significantly increased, boosting the country’s petroleum consumption.

Especially during this year's National Day holiday, which spanned eight days from September 29 to October 6, China witnessed a travel frenzy, with high-speed train tickets in short supply, hotels fully booked, and tourist attractions crowded with sightseers.

Since March of this year, China's apparent consumption of refined oil products has increased dramatically, corresponding with the rapid resurgence of travel after the pandemic. According to data from Zhuochuang Information, Compared to the same period in the last four years, the apparent consumption of refined oil products in the first eight months of this year marks the highest.

When China's oil demand will fully recover has been the most discussed topic in the international oil market this year. It is premised that after the pandemic, China's economy will rebound, leading to a significant increase in oil demand in sectors such as industrial production, causing oil prices to rise significantly.

However, China's economy did not sustain the momentum of recovery in the second quarter, and international oil prices mostly hovered between seventy to eighty U.S. dollars per barrel in the first half of the year. On the surface, this is because China's economy did not continue to rebound, leading to weak oil demand. But if looking at the apparent data for refined oil products, China's oil demand this year is not low at all. It's just that what supports China's refined oil products consumption is not industrial production, construction, or real estate, but the release of the pent-up desire to travel after the pandemic.

Refined oil products are mainly composed of petroleum fuels, which include gasoline, diesel, kerosene, and others. CITIC Futures Co., Ltd reports that gasoline is mainly used as fuel for passenger cars, so it is closely related to people's travel demand. Diesel demand, nevertheless, is influenced by the logistics industry and can partly reflect the situation in sectors such as manufacturing, the real estate, and construction.

Meng Peng, a senior analyst at Zhuochuang Information, believes that from January to August this year, the level of refined oil products consumption had increased significantly year-on-year. In terms of products, the recovery of the tourism industry this year is evident, with an increase in the rate of Chinese residents' travel and the distance they travel, which has driven significant growth in gasoline and aviation kerosene demand. In addition, the volume of road passenger transportation and freight transportation has also shown a clear upward trend this year. Therefore, although China’s construction and industrial sectors have not yet fully recovered to high levels of activity, its diesel consumption has still grown.

However, in September, the demand for refined oil products driven by travel might not be as strong as during the summer vacation. Meng stated that in September, Chinese residents' car trips were mainly short-distance, and with the decrease in temperature, the use of car air conditioning had also decreased. Thus, gasoline consumption in September might be flat, but apparent consumption remained at a high level. As for diesel, with the lower temperatures, outdoor projects, construction, and other industries were slowly recovering in activity, the logistics industry was operating steadily, and the essential demand for diesel was increasing, which might lead to an increase in apparent consumption compared to the previous month.

This year's National Day holiday, the hottest ever, drove refined oil products consumption demand. However, after the holiday, the demand may decline. Meng believes that Chinese residents' car trips in the remaining of 2023 will mainly focus on short distances, and with the colder weather, the tourism industry will enter the off-season. Therefore, it is expected that refined oil products demand may decline.

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