Some the big oil companies are beginning to notice a fledgling recovery in China as demand increases for oil and refined products.
Strict containment measures to stem the spread of the coronavirus had led to the world’s second biggest economy deeply contracting in the first quarter, but following the lifting of the lockdown in Wuhan, the economic activity seems to be tentatively recovering.
Speaking to CNBC, Bernard Looney, the chief executive officer of BP, said the company’s Chinese road transport operations were back to within 10% of pre-outbreak levels. BP’s incoming chief financial officer, Murray Auchincloss, also recently said its lubricant division, which markets Castrol-branded products like hydraulic oil, had begun recovering in China.
In its presentation for the first quarter, ExxonMobil also mentioned that preliminary sales data was promising. In Fujian province, the company expects a rapid rebound for retail fuels, lubricant end products, and polyethylene. Shell also pointed to some promising signs of recovery, with some retail stations exceeding pre-coronavirus levels in places like China. In its earnings call, Shell’s Jessica Uhl said:
“That gives a signal that the potential for a rapid recovery in some parts of our businesses and in certain circumstances can be good.”
While there is some optimism at seeing the Chinese economy perhaps rebounding faster than expected, it is tempered with a degree of caution. The possibility of China experiencing a second wave of infection is still being considered, and demand remains weak in large economies like India, Europe and the US as lockdown measures continue.