Shifting conditions in China and the approach of the end of the year were pulling base oil prices in different directions in Asia. An easing of COVID restrictions by the Chinese government ignited hopes of increased fuels and lubricants demand in that key market, supporting current values, while the need to reduce inventories ahead of Dec. 31 to avoid tax repercussions was limiting fresh orders in other countries and weighing on prices. Participants were also keeping an eye on a shipping bottleneck that was disrupting the passage of oil tankers in waterways around Turkey, raising concerns about global oil supplies at a particularly sensitive moment.
The Chinese government has started to ease its strict zero-COVID policies and allowing for increased movement of the population, with domestic ticket sales for tourist destinations soaring and fuel demand for transportation expected to rise. However, there were fears that the virus could spread rapidly, leading to a reverse in the government’s decision to ease restrictions.