Latin America Oil Demand in May 2014

Source: OPEC 5/19/2014, Location: South America

Total oil consumption in Brazil averaged 2.40 mb/d on a cumulative basis for 2014 (cumulative basis here refers to January and February 2014 only) after hitting the highest total consumption levels in February. Total oil demand in Brazil recorded more than 2.51 mb/d of consumption in February, 0.25 mb/d higher y-o-y.

For the first two months of the year, oil demand grew by 0.16 tb/d more than the level seen in 2013 - or more than 7%. Gains were witnessed across the whole of the product pool with the exception of fuel oil. Transportation fuels, namely gasoline and ethanol, were the products seen increasing the most with rises of more than 15% and 21%, respectively. Looking at the related car sales indicator for the same period, car sales dropped in January by 4% y-o-y before setting a substantial increase in February by close to 10%.

In aggregate terms, car sales rose by more than 5% y-o-y. Another significant development during the first two months was the increased consumption of diesel which gained close to 90 tb/d or more than 9%, boosted by a pick-up in construction activities ahead of the World Cup event in June. Demand for the most consumed product in Brazil is expected to remain relatively intact throughout 1Q and 2Q. Fuel oil had a mixed performance, declining considerably in January – by more than 25% - and increasing by more than 8% in February, mainly as a result of more fuel oil being burned in the power sector, due to a lack of hydropower. In cumulative terms, demand for the product fell by more than 11% y-o-y.

Oil demand in Brazil is expected to pick up in 2Q, again largely due to the World Cup in June, which is expected to provide support to transportation fuels. Demand is anticipated to moderate thereafter as expectations for the Brazilian economy in general is to grow by around 2%; hence oil demand growth is expected to reach 0.14 mb/d, relatively unchanged from last month’s MOMR.

In Argentina, oil consumption for the first two months of 2014 increased by around 15 tb/d, or more than 2% on accumulative basis. Gasoline, jet/kerosene, fuel oil and other products all recorded gains during the months of January and February, while LPG and diesel oil declined. Fuel oil led the gains, increasing by more than 12%, despite the falling trend of industrial production indicators. The surge in fuel oil consumption was most likely due to a shortage in the power sector. Transportation fuels were also seen on the rise with both gasoline and jet kerosene increasing, hinting towards an improvement in the sector. Diesel oil consumption was almost flat, as compared with last year. Oil demand in the country is anticipated to continue as initially expected - growing by around 22 tb/d from the 2013 level.

Latin America’s oil demand growth is expected to reach 0.24 mb/d in 2014, as compared with a growth level of 0.23 mb/d a year earlier.

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