World oil demand
World oil demand is estimated to average around 89.74 mb/d in 2013, representing
an increase of 0.82 mb/d, or around 1.0%, compared with the previous year. This is
broadly unchanged from the previous report, despite various adjustments to regional
demand growth figures. For 2014, growth is expected to increase by around 1.0 mb/d,
or 1.2%, over the current year to reach 90.78 mb/d.
As in the previous report, most revisions to the 2013 figures were carried out in the OECD
regions, namely OECD Americas (up by 16 tb/d); OECD Europe (up by 40 tb/d); and
OECD Asia Pacific (down by39 tb/d ). These changes reflect the most recent updates to
actual data in these regions and mirror the improvement in macroeconomic indicators, as
well as the switch to coal and LNG as a substitution for fossil fuels in the case of OECD
Asia Pacific. Downward revisions also occurred in the non-OECD regions, namely Other
Asia (down by 11 tb/d), as a result of lacklustre economic signals, in addition to the impact
of reduced subsidies in a number of countries of the region. On a quarterly basis, the
second and third quarters were revised higher by 36 tb/d and 20 tb/d, respectively, with the
majority of the adjustment attributed to OECD Europe. Conversely, the fourth quarter was
adjusted lower by 30 tb/d, due to the effect of economic concerns and subsidy cuts in
Other Asia and the FSU.
In OECD Americas, particularly the US, strong July actual oil demand figures and flat-tostrong
preliminary figures for August and September draw positive expectations for third
quarter oil demand results. Healthy car sale statistics, relatively high consumer confidence,
an improvement in unemployment figures and expanding manufacturing indicators (PMI)
provide support for these expectations. On the other hand, the on-going budgetary standoff
and the effects of sequester cuts could hamper the positive momentum in the
US economy, with some impact on the world economy as well.
In OECD Europe, aviation sector fuels supported overall oil demand in the ‘Big Four’
economies of the region. The cumulative oil demand figures for these economies over
the first eight months of the year are currently flat with jet fuel, diesel oil and LPG
recording positive growth, while fuel oil, gasoline and other products remain either flat
or declining. Overall, oil demand growth continues to shrink relative to the previous
year; however, at a slower pace than in previous months, hinting at some improvement
in the economy, particularly as the region is now officially out of recession.
In OECD Asia Pacific, the impact of coal substitution for fossil fuels in power
generation is now largely visible in the oil demand statistics. Japan continues to make
efforts to minimise the use of fuel and crude oil in its power plants, pushing the coal
consumption to high figures.
In the Other Asia region, flat-to-falling oil demand growth is mainly attributed to the
weakening economies evolving from the depreciation of currencies in India, Indonesia,
Malaysia and others. Other positive oil demand signs are coming from countries such
as Taiwan, Thailand, and Hong Kong, which are experiencing increased industrial
activities and transportation fuel consumption relative to the previous year.
The latest US monthly data for July 2013 showed a significant y-o-y rise in oil demand
of 0.55 mb/d or around 3%. This marks the strongest monthly gain so far in 2013 in
y-o-y terms. All main products rose, with the exception of residual fuel oil, which fell
The most notable development was in motor gasoline, which surged by 0.25 mb/d
similar to the growth levels registered back in August 2012. This comes on the back of
recent positive data for passenger car sales coupled with the peak summer driving
season, which traditionally starts at the end of May and ends with the US Labor Day
holiday at the beginning of September. US light passenger vehicle sales rose by
around 17% in August to stand around 1.5 million vehicles, the twenty-seventh consecutive y-o-y increase. Year-to-date, passenger car sales reached approximately
10.5 million vehicles, up by almost 10% from last year’s levels.
Preliminary weekly data for August 2013 shows flat growth y-o-y, with kerosene and
propane/propylene registering gains while motor gasoline and distillate fuel oil
marginally declined, and distillate fuel oil dropped deep into negative territory. On the
other hand, September 2013 preliminary data shows a very strong upsurge in oil
demand, growing by around 6% to average 19.45 mb/d with all product categories
exhibiting significant growth, with the exception of residual fuel oil. Relatively high
consumer confidence, the tick down in unemployment figures, the increase in
construction activities, the increasing manufacturing indicator (PMI) and encouraging
passenger car sales figures all provide reasoning to such preliminary figures.
Going forward, the down risk potential could stem from pending fiscal issues and the
effects of budget cuts in the overall economy. These issues will remain of public
concern and could dampen consumer confidence in the short term, thus potentially
having an adverse impact on overall oil consumption.
In Canada, total oil demand consumption in July 2013 fell below the 2 mb/d level.
Contrary to the previous month’s oil demand growth figures, July data showed a
decline of 0.16 mb/d or more than 7%, as all main product categories witnessed a
decline, with the exception of LPG. The fuel oil performance was rather poor, with the
largest decrease at about 50%, largely as a result of switching programmes due to
environmental regulations. The effect of such programmes can be seen in the LPG
numbers, which were almost 70% higher than the same period last year.
In Mexico, overall oil demand data for August was relatively flat. The negative
changes for LPG, gasoline, diesel oil and other products were almost offset by
matching rises in jet fuel and fuel oil. Gasoline, the dominant product in the country,
accounting for around 40% of oil consumption, dropped during the month of August
2013 despite encouraging car sales figures. The drop was modest compared with last
year, at around 10 tb/d which translates to 1.2%, on the other hand, car sales kept a
growing momentum since late last year. In the month of August, the car market in
Mexico grew by around 6% y-o-y with year-to-date sales also higher by around 9%.
In 2013, oil demand in OECD Americas is expected to grow 0.12 mb/d over the
previous year. In 2014, oil demand in the region is projected to increase by 0.11 mb/d
compared to the current year.
Oil consumption in the Europe ‘Big Four’ during August remained positive. Demand in
Germany, France, Italy and the UK grew by a combined 0.15 mb/d to stand at
6.8 mb/d, with the UK and Germany leading the group.
In particular, jet fuel consumption was notable, rising in the Europe Big 4 by more than
11% in August as flight operations expanded strongly during the month. Business
confidence and tourist air travel have been gaining steam as improving economic
conditions in Europe showed signs of stabilisation. Additionally, the low baseline in
2012 provided a greater gap between the yearly variance.
In the UK, overall oil demand was up by more than 15% y-o-y due to higher demand
for transportation fuels, mainly jet fuel/kerosene and gasoline, which increased by
almost 30% and 6%, respectively, and power generation fuels, namely fuel oil. The UK
automobile market still outpaced most of the other European markets with a
performance comparable to before the 2008 crisis. In August, the car market in the UK
hit the 18th y-o-y consecutive rise, increasing by almost 11% y-o-y. Year-to-date sales
were up to around 1.4 million vehicles, 10% higher than a year ago.
Oil consumption in Germany also grew, however to a lesser extent. Oil demand in the
country increased by more than 2% during August to stand at 2.2 mb/d. Comparable to
consumption in the UK, most of the rise came from transportation and power
generation fuels, implying improvement in the economic momentum of the country.
In France and Italy, the picture was quite the reverse – both nations experienced dips
in oil consumption in August, with France shrinking by more than 3% and Italy around
6% compared to the previous year. Targets to limit fossil fuel consumption in France
were recently announced by the French President. The aim is to reduce energy
consumption by 50% by 2050 and fossil fuel consumption by 30% by 2030. The
emphasis will be on the development of a new generation of electrical hybrid cars, the
improvement in home efficiency and the reduction of emissions through tax incentives.
Some plans might come as early as 2017. France consumed about 1.5 mb/d during
the month of August, with the bulk of consumption coming from diesel oil, which is
widely used as a transportation fuel in the country.
For 2013, European oil demand is now projected to shrink by 0.27 mb/d, while oil
demand in 2014 remains at the levels projected in the previous MOMR, namely a
contraction of 0.17 mb/d from the current year.
OECD Asia Pacific
Fuel substitution in favor of coal pushed total Japanese oil consumption lower on a
yearly basis. The use of fuel oil and crude as burning fuels for power generation plants
has been shrinking steeply as the switch to coal and LNG picks up pace.
Fuel oil consumption dropped by a dramatic 0.15 mb/d or 21% in August. The
consumption of coal surged to almost 6 million tonnes, according to the latest data. The
consumption of kerosene used for heating purposes also dipped by more than 23% as
the country experienced warmer weather conditions. However, jet aviation fuel
consumption showed a different picture during the month as demand for the product
registered steep growth compared to the same period last year, increasing by more
than 48% due to increased air transport propelled by positive economic activities, as well as the low base of comparison.
Oil demand in Japan shrank by almost 5% y-o-y in August to leave the total oil
consumption at 4.0 mb/d, representing a decline of 0.21 mb/d compared to a year ago.
In South Korea, oil consumption increased by 50 tb/d or more than 2% y-o-y in August.
Gasoil, gasoline and jet kerosene all recorded positive gains, while LPG and bunker
fuel consumption contracted. Gasoline demand stepped up during the month as the
product registered a 12% gain y-o-y, reflecting the positive vehicle sales figures in the
country. The South Korean vehicle market continued its encouraging 2013
performance, growing y-o-y sales in August, mainly as a result of low sales in the past
year. However, cumulative sales from the beginning of the year were up by almost
2.5%. In August, the domestic market improved from a year ago, surging to more than
124,000 vehicles and an improvement of almost 30% from the same time last year.
Cumulative statistics for the year are also encouraging with y-t-d sales recording more
than 1 million vehicles or up by 2.5% y-o-y. The forecast for South Korean oil demand
during 2013 and 2014 remained unchanged as compared to last month’s projections.
However, oil demand for the OECD Asia region has been adjusted 39 tb/d lower in
2013. The downward revisions have been distributed between the first three quarters of
the year – down 30 tb/d, 93 tb/d and 40 tb/d, respectively – mainly as a reflection of the
latest actual data.
After the latest revisions, OECD Asia Pacific oil consumption is now expected to fall
by 0.14 mb/d. In 2014, demand is forecast to continue declining, but by a lesser extent
of 0.13 mb/d.
In India, the declining trend in oil demand continued in August due to the weakening
economy evolving with the depreciation of the rupee. Oil demand remained flat y-o-y in
August. Strong demand in gasoline, jet fuel and other products, notably bitumen, have
been roughly offset by shrinking requirements for distillates, fuel oil, naphtha and LPG.
Despite a turbulent economic situation and resulting from a low base last year,
passenger vehicle sales in August 2013 increased by 4% y-o-y. This helped push
gasoline usage up by a remarkable 7% compared to the same period last year.
Nevertheless, the short-term outlook for the Indian automobile market remains rather
gloomy with high interest rates and fuel prices. A decline in distillate demand was
caused by a combination of less consumption in the power sector, increasing fuel
substitution with natural gas in the industry sector, as well as heavy rainfalls, implying
lower activities in the agricultural sector. Decreasing fuel subsidies for LPG and less
utilisation of naphtha in power generation also led to declines in both products. Fuel oil
usage in the agricultural sector has, again this month, been heavily substituted with
natural gas. Positive developments, however, were registered in the aviation sector and
with jet fuel requirements, which increased due to more holidays during August and
lower airline fares. Bitumen recorded a solid growth of 11% y-o-y due to a number of
new road projects beginning in the same month.
The overall forecast for Indian oil demand in 2013 and 2014 has worsened substantially
compared to last month’s projections as a result of the country’s growing fiscal deficit,
which would inevitably imply, among others, a lower subsidy for petroleum usage.
In Indonesia, increasing fuel oil and LPG requirements have been outpaced by
shrinking demand for all other product categories, the most prominent being distillates.
The declines in distillates are due to sharply contracting industrial activity a fifteen
month low due to weaker domestic demand. Indonesian oil demand, particularly for
transportation fuels, is also greatly subjected to possible changes in the current
domestic subsidy policy in order to limit the country’s fiscal deficit. Currently, in
Indonesia, 88 RON gasoline, gasoil and kerosene are subsidised. Moreover, a possible
new blending mandate could allow for an increase in biofuel blending shares in all
sectors and would aim at reducing gas/diesel oil imports.
Subsidy reductions also took place in Malaysia and apply to 95 RON gasoline and
diesel, whose prices raised by 11% in an effort to curb the fiscal deficit.
In Thailand, oil requirements fell by 3% y-o-y in July 2013, the bulk of these volumes
originating in distillates and fuel oil, mostly driven by slower industrial activities.
Taiwan’s flourishing petrochemical industry increased the country’s oil demand by 8%
y-o-y in July 2013.
Other Asia’s oil demand is expected to grow at 0.20 mb/d y-o-y in 2013.
As for 2014, oil demand is forecast to grow once more at 0.24 mb/d.
In Brazil, deceleration of manufacturing output for the first time since 2012 implied flat
fuel oil requirements during July 2013 y-o-y. Nevertheless, solid demand for
transportation fuels more than offset these declines, leading to an overall oil demand
growth of 6% y-o-y. The latest information shows also that ethanol production and
domestic sales increased strongly in July 2013.
In Argentina, oil demand in July 2013 grew strongly by 8% y-o-y; fuel oil, LPG and
gasoline have been the most demanded product categories.
The latest Ecuadorian data for August show an increase of 3% y-o-y in oil
requirements. Gasoline and diesel requirements rose substantially, while fuel oil
demand shrank slightly and jet/kerosene requirements remained flat.
Latin American oil demand is projected to grow in 2013 by 0.23 mb/d and in 2014 by
In Saudi Arabia, the first eight months of 2013 indicated a 2.2% y-o-y growth in oil
requirements. The main factors behind the growth were increasing requirements for
industrial and transportation fuels, and fuels for electricity generation, crude and fuel oil.
Similarly, strong oil demand during the first eight months of 2013 has been observed in
Qatar (20%), the bulk of which originated in the aviation and road transportation
sectors, as well as in Iraq (7%) and Kuwait (1%).
The outlook for Middle East oil demand in 2013 remained unchanged since last
month’s projections, with growth of 0.29 mb/d. In 2014, oil demand is projected to
increase by 0.31 mb/d.
China’s oil demand came in strong during August with 5% growth y-o-y, similar to the
growth in July 2013 and roughly at the average historical levels of the previous five
Increasing LPG requirements for the petrochemical industry in combination with rising jet
fuel demand accounted for the bulk of these gains. Moreover, gasoline demand rose as
a result of growth in auto sales, which advanced by 11% y-o-y. During the same month,
distillate requirements rose in line with the improvements in industrial production.
Fuel oil requirements fell notably in August 2013 y-o-y. This decrease was implied by the
switching of some independent refineries to crude as feedstock rather than fuel oil, thus
utilising domestic resources. Recently, a number of measures towards higher quality of
transportation fuels have been announced with the task to lower air pollution in big cities.
These include the promotion of natural gas in transportation, the continuation of controls
in new car registrations, and the improvement in the quality of fuels. The latter would
imply increasing retail prices, which would be carried out, to a certain extent, by the
consumers and may negatively influence consumption.
The overall 2013 and 2014 outlook remains rather skewed to the downside, mainly due
to risks for an economic slowdown and the implementation of some of the above
measures against air pollution in cities, in which case the transportation demand would
slow down. In 2013, Chinese oil demand is expected to grow 0.33 mb/d, while oil
demand in 2014 is projected to increase again by the same volume of 0.33 mb/d.