Latin America Oil Demand - November 2015

In Brazil, oil demand data from the month of September continued its downward trajectory, shrinking by 0.13 mb/d or close to 5% y-o-y and reducing the y-t-d oil demand growth level further, to settle into negative territory, now by almost 1% y-o-y. Total oil demand stood at 2.51 mb/d in September.

All products performed poorly, with the exception of ethanol, for which demand continued to increase in September, rising by more than 0.11 mb/d, which equates to a strong 48% rise y-o-y. Gasoline consumption, on the other hand, remained sluggish, falling by around 0.1 mb/d, or more than 12% y-o-y. In addition to the price differential, which favours the usage of ethanol in lieu of gasoline, a factor that might affect consumption of both the road transportation fuels negatively is the decline in vehicle sales data to a ten-year low, dropping by as much as 30% y-o-y with some brands reporting much higher dips.

Diesel demand also showed signs of weakness when compared to the same month last year, dropping by around 90 tb/d or more than 8% y-o-y, propelled by slower momentum in the overall economy, especially in the industrial and agriculture sectors. Jet/kerosene fuel showed a minor decrease of around 2 tb/d or around 2% y-o-y. Fuel oil demand decreased the most during the month of September, declining by around 42 tb/d or more than 34% y-o-y amid a slow-down in industrial production and power generation demand. For 2015, oil demand in Brazil is expected to be impacted negatively by slower economic momentum in the country. As a result, oil demand growth data was adjusted lower for 2H15.

Argentina was perhaps one of the few countries in Latin America exhibiting steady oil demand growth in August 2015, with an increase of around 4% y-o-y and most fuels rising during the month, except in the ‘other products’ categories. Transportation fuels, namely gasoline and partially diesel oil, recorded most of the gains, increasing by around 7% and 6% y-o-y, respectively.

In 2016, expectations for oil demand growth in Latin America are similar to last month’s projections with a somewhat better outlook for the economy compared with 2015. Latin American oil demand is expected to grow by 0.10 mb/d in 2015 and to reach 0.13 mb/d in 2016.