Latin America Oil Demand - May 2016

Source: OPEC 5/21/2016, Location: South America

In Brazil, 1Q16 data – with March data incorporated – now illustrates a steep decline in consumption of around 0.15 mb/d, or more than 6%, compared with 1Q15. The decline apparently reflects weak economic momentum. Focusing on March data, oil demand shed more than 4%, compared with the same period in 2015. All products performed far worse than expected, with the exception of gasoline, which grew by more than 66 tb/d, or 10%, y-o-y. Demand for gasoline was driven by economics, as the fuel became cheaper than ethanol for vehicles. Fuel oil demand decreased the most, dipping by around 38% y-o-y, mainly a result of progress in hydropower generation negatively impacting consumption. Additionally, the baseline was higher in 2015 because demand surged due to drought, encouraging fuel oil to be additionally used as a power generation fuel.

February oil consumption in Argentina reversed January’s positive trend, showing negative figures. Oil demand decreased by around 25 tb/d, or 4%, y-o-y. All products were either flat or slightly declining. Total oil demand in the country reached 0.68 mb/d, compared with 0.65 mb/d in February 2015.

Going forward, risks for 2016 oil demand growth in Latin America point to the downside, mainly due to expectations of an economic slowdown in Brazil. On the other hand, positive input should arise from the upcoming Olympic Games boosting transportation fuel consumption. Unforeseen weather conditions may also support oil demand.

In 2015, Latin American oil demand shrank by 50 tb/d, while oil demand in 2016 is projected to decline as well, by around 10 tb/d.

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