Americas Oil Demand in May 14

Source: OPEC 6/4/2014, Location: North America

US oil demand grew by 0.16 mb/d during the first four months of 2014 to stand at 19.1 mb/d, continuing an upward trend that began in the second half of 2013. Higher projected economic growth for the year is the substantial factor behind the current careful optimism for overall 2014 total oil demand growth. Nevertheless, there are also a number of factors that may impose negative effects on oil demand, such as the higher baseline in 2013, increasing vehicle fuel efficiencies, together with decreasing vehicle sizes and fuel substitution, notably with natural gas in the industrial and residential sectors. However, the risks for 2014 US oil demand are seen skewed more to the upside.

In the first four months of 2014, all main US product categories, with the exception of residual fuel oil and propane/propylene, rose, the bulk of which was seen in industrial and transportation fuels, especially distillates, gasoline and jet/kerosene. These figures are in line with the positive developments witnessed in improving industrial production and the economy. Continuous shrinkage in residual oil demand was once more implied by the substitution of natural gas.

Canada’s oil demand during the first quarter of 2014 was influenced by the colder winter, compared with last year and the seasonal norm, implying solid growth in heating fuels. Moreover, naphtha usage in the petrochemical industry was seen to be on the rise, while, during the same time-frame, demand for transportation fuels was stagnant, compared with 2013. The 2014 outlook for Canada’s oil demand is optimistic, the result of a forecast improvement in the economy.

Mexico’s oil demand declined by 0.1 mb/d to 2.1 mb/d during the first quarter of 2014, as a result of a weakening economy and lower industrial production, especially reduced fuel oil and distillate demand. Nevertheless, Mexico’s oil demand is expected to recover later in the year and grow slightly – the main driver being the country’s automotive industry, which is closely dependent on sales to the US.

As for 2014, the overall oil demand picture for the OECD Americas is unchanged from the previous month’s expectation with oil demand growth increasing by 190 tb/d.

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