World oil demand for 2015 remains relatively unchanged from the previous
month’s report, with growth for the year at 1.54 mb/d and total oil consumption at
92.98 mb/d. Estimates for 2016 world oil demand have been revised lower by
50 tb/d, to reach 1.20 mb/d of projected oil demand growth for 2016. The
downward revision was mainly to reflect slower expected economic growth in
Latin America. Total oil consumption in 2016 is anticipated to be around
The most recent monthly US oil demand data for January showed declines in oil
requirements of around 0.17 mb/d, or 1%, y-o-y. This marks the third decline in the past
four months, with December the only positive month in that time. The downward trend
witnessed since 4Q15 is a direct consequence of poor middle distillate performance,
which depressed overall data for the fourth quarter.
Distillates declined by around 0.3 mb/d, due to a number of factors such as a warmer
winter, lower industrial activity, particularly in the oil and gas sector, and the substitution
of coal by natural gas in the power generation sector, similar to what had happened in
2011–2013. This has caused less coal to be transported by railway, reducing
consumption of distillates in the transportation sector as well. The picture remained the
same in January when distillate fuel lost a massive 0.42 mb/d, roughly around 10%
y-o-y for the same reasons. Weekly data for February and March suggest a similar
Gasoline also bucked its recent positive movement, dipping by around 50 tb/d for the
first time since late 2014 despite the miles-driven indicator, as reported by the US
Department of Transportation, recording growth of around 2% y-o-y. This remains less
than growth levels seen in January 2015, which reached as much as 5% y-o-y. Total
consumption of gasoline remained elevated in January of this year, exceeding
8.7 mb/d, some 0.3 mb/d above the five-year average.
A notable positive development has been growth levels recorded in jet fuel
consumption, which rose by more than 80 tb/d or around 6% y-o-y, reflecting the
positive momentum observed in the aviation sector globally, including the US.
According to the International Air and Transport Association (IATA), domestic air
passenger and freight volumes in the US increased by around 6% y-o-y, with
international air passengers and freight volumes for North America recording gains of
more than 2% y-o-y.
Preliminary February weekly data shows growing overall requirements during the
month, with gasoline being the prime supporter of that growth, while middle distillate
fuel oil is expected to continue its rather modest performance.
March preliminary figures suggest once more overall solid growth of around 1.4% y-o-y.
Gains in gasoline and residual fuel oil demand were partly offset by losses in distillate fuel oil and jet fuel requirements. While US oil demand remains strongly dependent on
the US economy in 2016, uncertainties in the forecast going forward are currently
balanced with slight upward potential due to the low oil price environment providing
extra support to transportation fuels over the summer season.
The latest January data for Canada shows overall declining oil requirements with
mixed product performance. All products linked to the power generation sector plunged
compared with the same month one year ago, as weather conditions turned out to be
warmer than anticipated. Most notable were LPG, fuel oil and gas oil demand, which
fell considerably. The sharpest decline was seen in LPG consumption, which dipped by
almost 0.1 mb/d, or more than 54% y-o-y. Transportation fuels, on the other hand,
performed positively, though unable to counterbalance steep drops in other products.
Gasoline and jet kerosene recorded positive growth of around 1% and 33% y-o-y,
respectively. Projections for Canadian oil demand in 2016 remain unchanged from
those reported one month ago, with the anticipation of further negative downward
uncertainties as the oil and gas sector remains under pressure due to the low oil price.
In Mexico, February was another disappointing month for oil demand, characterized by
falling requirements in most product categories, with the largest decline seen in
residual fuel oil as a result of fuel substitution with natural gas. Mexican oil demand is
projected to fall slightly in 2016, with risks skewed more to the downside compared with
the previous month’s report.
In 2015, OECD Americas’ oil demand grew by 0.24 mb/d compared with a year
earlier. 2016 demand for oil in OECD Americas is projected to grow by 0.27 mb/d,
compared with the previous year.
European oil demand during the first two months of 2016 showed some signs of a
slowdown from levels seen in November and December. Demand decreased by
around 0.11 mb/d in January and February combined, while the largest share of the
decline occurred in February, with a 0.13 mb/d fall. This can be largely attributed to a
higher baseline in 2015, when oil consumption was supported by a lower oil price
environment, promoting demand for road transportation fuels. Additionally, colder-thananticipated
weather in 1Q15 called for the additional consumption of heating oil.
In 2016, the picture has reversed, at least for now. Consumption in 2015 adversely
impacted the baseline of comparison and weather conditions were not as cold as in
2015, allowing for a slowdown in consumption. February Big 4 total oil demand data
indicates a decrease of around 2% y-o-y, with mixed performance within the products –
diesel oil, jet fuel, LPG and gasoline declined, while naphtha, jet/kerosene and fuel oil
gained some barrels.
Declines in oil demand were experienced in most countries in the region with the
exception of Turkey, Spain, Belgium and Poland; Turkey continued its solid growth
momentum, which started in 2015. Passenger vehicle sales continued to see positive
growth performance in February. According to the European Automobile Manufacturing
Association, the EU passenger car market recorded its 30th consecutive month of
growth in February, when registrations increased by more than 14% y-o-y, reaching
1.06 million units. Italy contributed more than 27%, France 13%, Spain 13% and
Germany 12%, all posting double-digit percentage growth in February.
Going forward, demand for oil products should receive support from possible
improvements in industrial production and positive developments in vehicle sales data.
Downside risks are primarily financial in nature and remain the same as in previous
months. These include unsolved debt issues in a number of countries in the region and
ongoing austerity measures, as well as strongly taxed European oil.
In 2015, European oil demand gained 0.26 mb/d as compared to a year earlier, while
oil demand in 2016 is projected to be almost flat, gaining a mere 10 tb/d y-o-y.
OECD Asia Pacific
February Japanese oil demand decreased once more by 0.21 mb/d, or around 5%,
y-o-y. Most products were in negative territory, with the exception of LPG and middle
distillates – diesel oil and jet/kerosene.
Oil requirements for direct crude burning and fuel oil for electricity generation dipped
most, with these products losing around 16% and 15%, respectively. This was mainly
as a result of lower-than-expected heating requirements compared with 2015, implying
that weather conditions were warmer than originally anticipated, leading to lower power
consumption. Additionally, Takahama No.3 reactor rejoined operations at the end of
January, which intensified the decline in demand for power generation fuels.
On the other hand, demand for LPG and jet fuel grew over the course of the month by
around 1% y-o-y for LPG and a solid 12% y-o-y for jet fuel, with the latter supported by
an improvement in air passenger and freight volumes as reported by the IATA.
Japanese oil demand growth in 2016 is projected to focus solely on petrochemical
activities in the country, moving away from previously predominant electricitygeneration
fuels, namely crude and fuel oil.
As experienced in 2015, naphtha was the only product in Japanese oil consumption
data recording healthy growth at 50 tb/d or around 7% y-o-y. However, naphtha
demand dropped sharply in February by around 62 tb/d or 7% y-o-y, reflecting the start
of maintenance activities by a number of naphtha cracker units in the country. The drop
is anticipated to increase as more plants start to shut down units for scheduled
The outlook for 2016 remains unchanged from the previous month’s forecast and is
determined by the likelihood of operation restarts in some of the country’s nuclear
power plants during 2016.
In South Korea, January demand came up strongly again, with gains of close to
0.16 mb/d or around 6% y-o-y. Strong fuel oil demand fed into the power generation
sector and there were also significant developments in transportation fuels, with
jet/kerosene being the major driving forces behind this solid development. Flourishing
petrochemical activities, which called for rising LPG requirements, accounted for the
bulk of the increases. The outlook for South Korean oil consumption during 2016
remained unchanged compared with the previous month’s projections, with positive
assumptions regarding economic developments as well as expansion in the
petrochemical and transportation sectors.
OECD Asia Pacific oil consumption in 2015 shrank by 50 tb/d. This downward trend
is anticipated to continue in 2016 and record a decline by around 0.1 mb/d.
Indian oil demand continued its impressive performance in 2016, with significant
growth recorded in February. It accelerated by more than 0.48 mb/d, or around 12%,
y-o-y, recording the fourth-highest level of growth, resulting in total consumption
reaching historical figures of around 4.59 mb/d. Demand was not only supported by the
usual notable growth in gasoline and LPG, but also by diesel oil and fuel oil, which
increased noticeably during the month of February.
Indian gasoline demand grew by around 65 tb/d, or around 13%, y-o-y, with total
consumption levels reaching above 0.57 mb/d for only the third time on record,
according to data dating back to early last decade. Support remains to be gained from
the low oil price environment, cheap credits and rising income, customer preference to
consume gasoline rather than diesel oil due to price advantages, especially in the
smaller car market, and strong two-wheeler vehicle sales.
According to the Ministry of Petroleum and Natural Gas of India, two-wheelers – for
which gasoline is the fuel of choice – recorded significant growth in sales of around
13% y-o-y, selling close to 1.4 million units. Overall passenger vehicle sales recorded a
rise of 1.7% during February; passenger cars declined by around 4% y-o-y, while sales
of utility vehicles and vans increased by around 21% and 13% y-o-y, respectively.
Another observed development was the continuation of growth in LPG, which rose by
more than 87 tb/d in February, or around 15%, compared with the same period in 2015.
Total consumption reached 0.66 mb/d. Support was mainly led by a pick-up in
residential usage, which accounts for more than 85% of Indian LPG consumption.
Additionally, Indian diesel oil demand rose in February against the seasonal pattern – it
traditionally peaks in summer. Growth incurred from better overall economic
momentum promoted higher construction activity in infrastructure projects. Diesel grew
by around 0.18 mb/d or close to 11% y-o-y. Fuel oil demand growth was also markedly
positive as a result of higher-than-anticipated consumption in the power and steel
sectors. Fuel oil grew by around 47 tb/d or 16% y-o-y.
In Indonesia, the latest available January data was led by rising demand for
jet/kerosene and LPG, the first mostly used in the aviation sector and the latter for
industrial and residential purposes. Other transportation fuels have also grown going
into 2016, particularly gasoline and diesel oil. Total consumption reached 1.46 mb/d,
with growth of around 50 tb/d y-o-y.
In Taiwan, oil demand increased by around 2% y-o-y in January, with the bulk of gains
originating in gasoline, diesel oil and fuel oil. Oil demand in the country is anticipated to
flip into positive territory in 2016, led mainly by transportation fuels.
Going forward, uncertainties for oil demand in Other Asia are currently leaning towards
the upside, mainly because overall economic improvement in the biggest oil consumer
in the region, India, is projected to continue. Additionally, most countries in the region
are experiencing rather stable general economic conditions.
Other Asia’s oil demand grew by 0.42 mb/d in 2015. For 2016, oil demand is forecast
to be 0.39 mb/d higher than for 2015.
In February, oil demand in Brazil declined marginally by 16 tb/d, or around 1%, y-o-y,
to average 2.34 mb/d. This decline was led by fuel oil and ethanol, which eased by
around 37 tb/d each, or more than 35% and 14%, y-o-y, respectively.
This reduction in fuel oil demand was attributed to improvements in hydro-power
generation reducing consumption of fuel oil, as well as a higher base of comparison.
Furthermore, a reduction in ethanol consumption was the result of an increase in prices
for ethanol, minimizing its competitiveness against gasoline.
Gasoline grew by around 52 tb/d or 8% y-o-y, minimizing the overall impact on total
product demand growth. Demand for diesel increased marginally in February, adding
some 14 tb/d to 2015 figures, for total consumption of 0.93 mb/d. This marginal
increase occurred despite slower industrial output in various sectors, though a lower
baseline was behind the gain. The other middle distillate fuel – jet/kerosene – reflected
the slower momentum of the Brazilian economy, decreasing by around 6% y-o-y.
However, demand for transportation fuels is in general expected to slightly pick up
towards 2Q16 and 3Q16 as a result of the Olympic Games in August, which it is
assumed will attract a large audience.
Oil consumption in Argentina increased only marginally in January despite the growing
use of transportation fuels. Fuel oil registered the most notable gain, increasing by
around 23% y-o-y. Diesel oil and gasoline both grew, recording gains of more than 8%
and 3% y-o-y. Total consumption remained hovering at around 0.68 mb/d and is so far
anticipated to play a positive role in total Latin American oil consumption in 2016.
Looking ahead, uncertainties for 2016 oil demand growth in Latin America remain
much like those of the previous month, as economic conditions in Brazil are projected
to remain rather slow. The low oil price environment, the Olympic Games in Brazil and
any unusual weather-related conditions may bring more demand to the transportation
and power generation sectors.
Latin American oil demand was broadly unchanged in 2015 over a year earlier.
During 2016, oil demand growth is forecast to be slightly higher than in 2015, reaching
15 tb/d of possible oil demand growth.
As Saudi Arabia enters into a lower oil demand season, oil demand data for the month
of February came as no surprise. Oil requirements declined during the month by
around 0.15 mb/d, or about 7%, y-o-y. Total consumption was at around 2.07 mb/d.
Other factors exacerbating the decline were cold and rainy weather in February, which
heavily affected transportation fuel consumption, a possible reaction to subsidy
reductions strongly impacting power generation consumption and the higher baseline
of comparison, which affected consumption of all products. Oil requirements in Saudi
Arabia usually peak during the summer season as demand for air conditioning rises,
boosting total oil requirements to as much as 2.7–3.0 mb/d.
Performance of all transportation fuels weakened, with the largest impact seen in diesel
oil consumption, which fell by more than 10% y-o-y. Gasoline and jet/kerosene dropped
at a lesser magnitude of around 5% and 3% y-o-y, respectively.
Oil demand in Iraq declined in February, though only marginally. Total demand fell by
around 15 tb/d, or 2%, y-o-y. All products were in a declining pattern with the exception
of fuel oil, which posted solid growth of 10% y-o-y. Traditionally, oil demand in Iraq is
driven by diesel oil – as both a transportation and industrial fuel – and this declined
sharply in February, shedding around 23% from 2015 levels, indicating slower
momentum in both the transportation and industrial sectors due to seasonality factors.
Other products declined marginally below February 2015 levels.
Other countries in the region showed positive performance in February. Oil demand in
Kuwait increased by around 4% y-o-y, as did consumption in the UAE, which
increased by a similar amount.
Projections for oil demand in 2016 remain, as highlighted in the previous MOMR, highly
dependent on the economic performance of major oil-producing countries in the region
and measures to mitigate the impact of lower oil prices.
Middle East oil demand for 2015 grew by 0.20 mb/d, and is anticipated to growth by
around 0.15 mb/d in 2016.
February oil demand growth in China was in positive territory for the second month at
0.18 mb/d. China’s oil demand strength continues to lean towards gasoline usage in
the road transportation sector and LPG in the petrochemical sector. Demand for diesel
oil and residual fuel oil declined, as a result of fuel substitution with natural gas and
coal, particularly in the industrial sector.
LPG demand picked up in February, increasing by 0.22 mb/d or around 20% y-o-y.
Support for the product was upheld by improvements in propane dehydrogenation
(PDH) plant margins, keeping LPG consumption intact over the month and possibly
also the next few months.
Gasoline consumption followed a similar trend, adding some 0.13 tb/d or close to 5%
y-o-y. Retail sales were rising towards the end of January and into February,
encouraged by additional driving for the Chinese New Year. According to the China
Association for Automobile Manufacturers (CAAM), vehicles sales reached more than 4
million units for the first two months of 2016, a 4.4% rise y-o-y.
On the other hand, diesel oil demand was lower in February y-o-y by around 60 tb/d or
2%, mostly due to slower overall industrial activity, particularly in mining plants and the
construction sector, aggravated by the lunar New Year holidays. Prospects for diesel
demand in the near future will be encouraged by expansion projects in the country’s
infrastructure, which will elevate the product’s consumption, bringing it up from its
current low level.
Consumption of fuel oil also declined more steeply than in January, as initial data
seemed to suggest a decrease in growth of around 60 tb/d or 10% y-o-y. Slower
industrial activities as well as weaker teapot refinery consumption due to a switch to
crude oil were the factors behind this slowdown.
The 2016 outlook for China remains balanced, with possible downside risks linked to a
slowing of the economy, as well as policies supporting a reduction in transportation fuel
consumption. On the other hand, developments in the petrochemical and transportation
sectors form upside potential for China’s oil demand growth.
For 2015, Chinese oil demand grew at a rate of 0.37 mb/d, while oil demand in 2016
is projected to record lower growth levels than in 2015, increasing by 0.29 mb/d y-o-y.
Uncertainties ahead for 2016 projections
The forecast 2016 is subject to many uncertainties, mainly the pace of economic
growth in major oil demand centers, the removal of subsidies in oil-producing
countries, mild weather in the Northern Hemisphere and the diverse effects of oil
prices in different regions. These will be examined one by one.
First, economic developments in Latin America and China are of concern. There is
great uncertainty as to whether weakening economic activity in Latin America and
signals of a slowdown in China will be reflected in oil demand data, especially for
China. So far, consumption data for industrial fuels and middle distillates in
particular, are reflecting this slowdown in both regions. In Latin America,
uncertainties for 2016 point downward, as the economic environment in Brazil is
projected to remain rather slow for the rest of the year. In contrast, the Olympic
Games should bring more demand from the transportation and power generation
sectors in that country, with a particular focus on oil demand in 2Q16 and 3Q16.
Elsewhere, economic development suggests a brighter outlook for certain
countries, such as India and South Korea. Uncertainties for oil demand in India are
currently leaning mainly towards the upside as overall economic activities are
projected to remain positive, supporting not only industrial and manufacturing fuels
led by middle distillates, but also transportation fuels. In South Korea, positive
assumptions for economic development as well as expansion in the petrochemical
and transportation sectors support this optimistic outlook.
Second, the impact on oil demand so far cannot yet be clearly attributed to the
removal of subsidies in some oil-producing countries, especially in the Middle East.
Oil demand data from Saudi Arabia in the first two months of 2016 was lower-thananticipated,
however, this could be due to the 1Q16 being a low-demand season, as power generation fuel requirements for heavy distillates reach a peak in the
summer, when air conditioning usage intensifies. Since subsidies were reduced in
various countries around the region, including the UAE, Kuwait, Oman and others,
overall projections for oil demand in the Middle East will be strongly dependent on
the economic performance of major oil-producing countries in the region as well as
the success of measures to mitigate the impact of lower oil prices.
Third, warmer weather conditions in the Northern Hemisphere already reduced the
consumption of light/middle distillate products in 1Q16, with lower heating fuel
requirements being observed in the US, Canada and Europe. Possible changes in
weather conditions, when compared with anticipated normal 4Q temperatures, will
introduce uncertainty in middle distillate requirement projections going forward.
Elsewhere, a warmer summer in the Middle East and Latin America should
positively impact power generation fuel requirements.
Last, sharp changes in oil prices tend to create a high degree of uncertainty going
forward, as they not only affect requirements by end consumers – depending on to
what degree the price impact is passed on to consumers – but also the overall
economic activity of producing nations. A case in point is road transportation fuel
demand from the US and, to a lesser extent, Europe, where there was significant
reaction to the low oil price environment in 2015. Extra support is projected for
transportation fuels over the summer driving season should prices remain at 2015
With this in mind, current negative factors seem to outweigh positive ones and
possibly imply downward revisions in oil demand growth, should existing signs
persist going forward.