The improvement in activity growth in China has been one reason for more bullish sentiment in the oil market around the turn of the year. However, the stimulus-fuelled cyclical upturn in China’s economy and the related support for commodities demand is likely to prove short lived and we suspect structural headwinds will return to the fore before long, weighing on global oil demand growth once again.
This is one of many reasons why we suspect the risks to our forecasts for energy prices to ease lower this year are, if anything, skewed to the downside. What’s more, we would not rule out growing tensions within OPEC+ resulting in a major pivot in oil policy by Saudi Arabia. Meanwhile, there is a chance that, as part of a resolution to the war in Ukraine, Europe taking more Russian gas is attached as a condition to any Trump-brokered deal.
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