FxWirePro: Daily Commodity Tracker - 21st March, 2022 
China oil product output and inventories data for March showed signs of stabilisation of oil demand. Total implied oil demand was 411kb/d higher y/y, which brought Q1 average demand growth to 180kb/d y/y. Uptick was mainly on account of gasoline and LPG which were the main growth drivers. Despite still being lower y/y, diesel demand had a much smaller decline than in January and February.
The pick-up in macro activities, especially in FAI and property, were likely supporting diesel demand. China’s National Development and Reform Commission (NDRC) issued guidelines to increase residential land supply in first-tier cities. Additionally, residential land supply will also increase in some second-tier cities. The Commission said that it will ensure a stable housing consumption by developing housing rental market, supporting constructions of parking lots, airports as well as accelerating consumptions in cruise industry.
Higher construction activities not only add diesel demand directly, their pulling effect on steel and coal industries help push freight volumes higher, which also benefits diesel usage. Hence, diesel demand will continue to stabilise over the next two quarters, with extreme weakness such as that in the early part of this year unlikely to repeat.
"We maintain our forecast of 220kb/d y/y overall demand growth for whole year 2016. We expect the steady growth in gasoline to continue, with no repeat of extremely weak diesel demand in January and February." said Barclays in a report.
China’s NDRC announced to increase retail prices of gasoline and diesel for the first time in six months, starting from 27 April. Retail gasoline price will be increased by RMB165 per metric ton and diesel price will be increased by RMB160 per metric ton.
"Together with lower domestic crude oil production (130kb/d y/y) and SPR purchase (268kb/d), we expect China to import average 7.5mb/d crude oil in 2016 (up ~0.7mb/d y/y)." adds Barclays.
