World oil demand growth in 2015 was revised upward by around 84 tb/d as a
result of better-than-expected performance from OECD America and Europe in
1H15. As a result, 2015 world oil demand growth currently stands at 1.46 mb/d,
leading to total global consumption of 92.79 mb/d.
In contrast, world oil demand growth in 2016 was revised downward by 50 tb/d
due to the projected slower economic momentum in Latin America and China.
World oil demand growth is now anticipated at 1.29 mb/d, leading to total global
consumption of around 94.08 mb/d.
The latest monthly data implies bullish US oil demand for June 2015, showing a y-o-y
increase of about 0.7 mb/d or 3.8%. Approximately half of the growth in June 2015 oil
requirements, around 0.35 mb/d, originates in gasoline, which was particularly
supported by low fuel prices – approximately 27% lower than the same month in 2014
– and higher mileage – around 3.9% y-o-y. Growing gasoline demand is in line with an
expanding US vehicle market, particularly for sport utility (SUV) and cross-over
vehicles. Steep increases in oil requirements have also originated in jet/fuel and
propane/propylene requirements, while the overall June 2015 oil demand growth of
0.7 mb/d has been only partly offset by declines in the requirements for distillates and
residual fuel oil. Six months in 2015 show US oil demand higher by around 0.4 mb/d
compared with the same period last year. The main characteristics in 1H14 were
strongly growing gasoline and propane/propylene demand, while residual fuel oil and
distillate requirements declined. July 2015 figures, which are based on preliminary
weekly data, show an increase of around 4.4% y-o-y, with gasoline and jet fuel
requirements rising, but are partly offset by disappointing distillate and residual fuel oil
demand. August 2015 preliminary data for the main products indicates another strong
month in US oil demand, with gasoline being the leading product in the main month of
the holiday driving season. As a result of these factors, US oil demand is projected to
remain strong throughout the remainder of 2015, with transportation fuels taking the
largest share. Moreover, the US is projected to remain the main contributor to OECD oil
demand during 2015 and 2016.
In Mexico, July 2015 was marked by strongly increasing gasoline, jet/fuel and diesel
demand, which was partly offset by declining residual fuel oil requirements.
Consequently, Mexican oil demand in July 2015 increased by almost 2% y-o-y. 2015
Mexican oil demand remained unchanged since last month and is expected to decline
by 1.6% y-o-y; for 2016, oil demand is projected to grow again slightly as a result of
positive economic expectations.
Canadian oil requirements fell for another month y-o-y in June 2015, with all the main
product categories, except LPG, declining. Projections for 2015 Canadian oil demand
remain at the same level as in the previous month, leaving oil requirements during
2015 declining compared with 2014. Depending on the development of the overall
economy, 2016 growth in Canadian oil demand is projected to slightly exceed 2015,
which has remained unchanged since last month.
After the latest upward revision to 2015 OECD Americas demand data, 2016 oil
demand in the region is now anticipated to be almost unchanged from 2015. Oil
demand growth in 2016 will be driven by a slight improvement in economic conditions.
2016 US oil demand is now projected to grow at a slower pace than in 2015. 2016
forecasts are focused on growth in the US economy and oil price levels. In addition to
further expansions in the petrochemical industry, on the other hand, some downside
risks would result from higher fuel substitution with natural gas and implementation of
fuel efficiencies in the road transportation sector.
In 2015, OECD Americas oil demand is projected to grow by 0.33 mb/d compared with
2014. 2016 OECD Americas oil demand is forecast to increase by the same rate
compared with 2015.
European oil demand continued to rise in July 2015 for another month, increasing by
an estimated 0.22 mb/d or more than 3% y-o-y in the Big 4 regional consumers
(Germany, the UK, France and Italy). The increase was substantial and only slightly
smaller in volume than in previous months this year, particularly 1Q15, which involved
also the impact of cold weather and some low baseline effects. Although continuing
economic concerns in some parts of the region pose some uncertainty as far as the
development of oil demand in the region during 2015 and 2016, positive developments
were the dominating factors during the previous month. Data for the first seven months
of 2015 showed increasing European Big 4 oil demand by approximately 3.2% y-o-y,
with transportation fuels, notably diesel, accounting for the bulk of the increases. This
was in line with the positive momentum in auto sales, which showed solid increases of
around 8% during the first seven months of 2015 y-o-y, and with solid expansions in all
major auto markets. The general expectations for the region’s oil demand during 2015
have certainly improved since last month’s projections, but are still coupled with
uncertainties that depend on the region’s economic developments. Moreover, high
taxation polices in oil use and fuel substitutions are the main factors that could curb oil
demand, despite economic growth, low baselines and low fuel price environments.
For 2016, developments in the region’s economies, in view of the low oil price
environment, are the main assumptions for the OECD Europe forecast for 2016. From
a products point of view, transportation fuels, particularly diesel and gasoline, are
projected to lead oil consumption in 2016. On the other hand, high uncertainties linked
to economic turbulences and budget cuts as well as fuel substitution and efficiencies in
the road transportation sectors remain negative factors for oil demand in the region
OECD Europe’s oil demand is projected to grow by 0.16 mb/d in 2015 for the first
time since 2006, while 2016 oil demand is anticipated to remain roughly at the level of
OECD Asia Pacific
In July 2015, Japanese oil demand contracted slightly by 0.04 mb/d or around 1%
y-o-y, with a mixed picture across product categories. Gasoline and naphtha
experienced substantial gains of more than 5% and 12% y-o-y, respectively, while oil
requirements in crude for direct burning and electricity generation fell for one more
month by a massive 62 tb/d or more than 41% y-o-y, as a result of fuel substitution with
natural gas and coal. A further decline in Japanese direct crude and fuel oil usage is
expected in August, as a result of the restart of the first nuclear plant in the country.
New auto sales in August 2015 were also less than promising, showing a 2% y-o-y
decrease, the eighth consecutive monthly decrease. The outlook for 2015 Japanese oil
demand has been lowered slightly from last month, with the risks being once more
skewed towards the downside, as a result of weaker economic forecasts.
In South Korea, June 2015 oil demand came up increasing by more than 82 tb/d or
approximately 3.5% y-o-y. Gains in the petrochemical industry, which called for
increasing naphtha requirements and gas/diesel oil, were partly offset by sharply
declining requirements in fuel oil and LPG. The outlook for South Korean oil
consumption during 2015 and 2016 remains healthy, unchanged as compared to last
Oil demand projections for 2016 remain unchanged since last month and assume a
higher likelihood that a number of Japanese nuclear plants will re-join operation.
Additionally, slightly better economic conditions as projected for 2015 are also
assumed. Petrochemical plants are expected to be the oil demand driver in 2016with a
slight improvement in transportation fuels.
OECD Asia Pacific oil consumption is projected to fall by 0.11 mb/d in 2015, while
the drop will continue also in 2016 by 0.14 mb/d y-o-y.
In India, oil demand growth remains strong, with July 2015 growth data showing a
healthy rise. Oil demand increased by around 0.2 mb/d, or 5.5% y-o-y, a very optimistic
kick start to 3Q15, taking total product consumption in India to 3.82 mb/d. In terms of
product performance, fuel oil was the star product in July, rising by more than 50 tb/d or
more than 25% y-o-y. The manufacturing sector performance played a part in this
increase as sub-sectors such as steel and petrochemicals recorded increases in fuel oil
requirements. Additionally, the manufacturing Purchasing Managers’ Index (PMI)
registered its second highest reading in 2015, after the month of January, of 52.7
points, well above the threshold of 50, separating expansion from contraction. For other
products, the trend almost mirrors previous months, with LPG and gasoline dominating
product growth with increases of more than 10% and 12% y-o-y, respectively. Growth
in gasoline demand reached 53 tb/d y-o-y in July. This rise is attributed to a number of
factors, including the reduction in gasoline retail prices, which have been reduced twice
Sales of passenger vehicles, specifically the two wheelers that use gasoline as a fuel,
continued to increase, reaching 1.3 million units in July, which is 0.3% above the same
month a year earlier. This indicates a shift of consumer preference from diesel to
gasoline vehicles. LPG demand has registered increases for almost 24 consecutive
months, as a result of an increase in new connections and the streamlining of sales
schemes between commercial and residential customers. LPG increased by 52 tb/d
compared with July 2015. Diesel consumption, on the other hand, fell slightly by 7 tb/d
or down by 0.5% y-o-y to reach total consumption of 1.48 mb/d. This slight drop can be
a result of heavy rains reducing agricultural requirements in addition to a decline in the
movement of goods between different states due to floods hindering transportation.
In Indonesia, the latest June 2015 data shows yet another increase of around 1.8%
after an increase of 2.7% y-o-y in May. All products showed positive performances with
the exception of the “other products” category. Cumulatively, the 1H15 performance for
Indonesia has been positive, increasing by around 43 tb/d, which equates to around
3% compared with the same period a year earlier.