(Bloomberg) -- The outlook for Chinese oil markets is looking a little brighter after a boom in travel over the Lunar New Year, raising hopes of a more sustained recovery in demand.

China has set a brisk pace in snapping up cargoes of crude from across the world since the mid-February holiday, according to traders, as well as increasing its term supplies from Saudi Arabia for March. While traders said the volumes bought are steady compared to the previous month, the purchases are being made ahead of maintenance work, when refiners normally reduce imports.

“Some refineries may be raising run rates or postponing maintenance plans because of strong demand momentum following higher-than-expected Lunar New Year travel,” analysts at Energy Aspects Ltd. including Jianan Sun wrote in note last week. “Chinese spot crude buying has been slightly stronger than our expectations.”

The lunar holiday, a festive period when much of the population travels far and wide, is a pivotal time for the Chinese economy, which has struggled since reopening over a year ago. This year, travel and spending exceeded levels from before the pandemic despite the financial stresses weighing on households. For crude refiners, that translates to improved demand for fuels like gasoline.

It’s a welcome boost to oil markets that had been pricing in softer Chinese consumption this year. Moreover, the purchases are being made even though refiners have planned more maintenance halts than usual, which should keep run rates elevated at the plants that aren’t affected.

Refining capacity taken offline in 2024 is expected to rise 18% to a three-year high, according to a forecast from Mysteel OilChem earlier this month. Most of that is due to fall in the second and fourth quarters, while the majority of crude cargoes bought this month would arrive in May. 

Those purchases have spanned the globe, from the Middle East and Africa, to the US, Brazil and the North Sea, according to traders.

As the world’s biggest importer, Chinese oil consumption is an important determinant of global prices. Still, there are nuances in the holiday data that might cool some of the excitement around what it might mean for commodities demand. Daily spending per traveler, for instance, was actually lower than during a number of major holidays since the economy reopened, according to Bloomberg Economics.

On the Wire

February’s record cut in the five-year loan prime rate is a much needed step. However, without stronger measures to revive fragile sentiment, the cut by itself isn’t likely to turn around the tumbling property market and boost China’s struggling economy, said Bloomberg Economics. 

Chinese mining company Yintai Gold Co. agreed to buy Canadian gold exploration firm Osino Resources Corp. for about C$368 million ($273 million).

China’s local governments so far appear reluctant or unable to borrow more despite pressure to stimulate growth, fueling expectations Beijing may pick up their slack and take on more debt.

Steel production in China and India will likely expand over the next few months, Capital Economics said in a note Feb. 23, pointing out that the year-on-year contraction in global output in January masks a sizeable increase in the two countries from a month earlier.

The Week’s Diary

(All times Beijing unless noted.)

Monday, Feb. 26:

  • China’s environment ministry holds briefing in Beijing on interim regulations for carbon emissions trading, 10:00
  • EARNINGS: CLP Holdings

Tuesday, Feb. 27:

  • Nothing major scheduled

Wednesday, Feb. 28:

  • China Photovoltaic Industry Association review and outlook seminar in Beijing, 09:00
  • CNPC’s research unit publishes annual report
    • Briefing in Beijing from 14:30
  • CCTD’s weekly online briefing on Chinese coal, 15:00
  • EARNINGS: Xinyi Solar, Daqo New Energy

Thursday, Feb. 29:


Friday, March 1:

  • China’s official PMIs for February, 09:30
  • Caixin’s China factory PMI for February, 09:45
  • China weekly iron ore port stockpiles
  • Shanghai exchange weekly commodities inventory, ~15:30

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