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World Oil Demand

30

OPEC Monthly Oil Market Report – August 2017

The improvement of the economic conditions across the region, alongside positive vehicle sales, have

allowed OECD Europe oil demand data to be revised upward once more. As such an upward adjustment of

40 tb/d in 2Q17 was considered in the 2017 data. For 2018, oil demand projections were revised higher by

10 tb/d. This mainly reflects Europe’s positive economic outlook compared to last month’s report.

The flourishing petrochemical industry in the OECD Asia Pacific, notably in South Korea, allowed for a

positive adjustment to 2Q17 oil demand growth of 20 tb/d.

OECD Americas

Graph 4 - 1: OECD Americas oil demand, y-o-y

change

Graph 4 - 2: US gasoline demand, y-o-y change

US

The latest

US

monthly data for May 2017 implied a strong increase in oil demand of around 0.8 mb/d y-o-y.

This is the largest monthly growth in around two years and is in line with general expectations for the

country’s economy. Gains in oil usage have been substantial, but mainly in the transportation and industrial

sectors. Motor gasoline requirements in May saw their strongest monthly growth in 2017, rising solidly by

more than 0.1 mb/d helped by the continuing support of the relatively lower oil price environment, positive

economic growth and despite ongoing gains in vehicle efficiencies. Growth in jet kerosene demand was

similarly strong in May, expanding by around 0.1 mb/d y-o-y. This is the result of increased travelling

activities during the start of the regular holiday season. Distillates demand in May also increased sharply, by

more than 0.2 mb/d y-o-y, with the bulk of gains registered in the transportation sector. Growth in industrial

diesel also showed growth however to lesser degree. Demand for LPG was also seen to expand y-o-y,

notably for the petrochemical sector. Furthermore, residual fuel oil requirements also increased in line with

the improving industrial sector and the low historical oil consumption baseline.

With available data for seven months in 2017 – monthly data until May and preliminary weekly data for June

and July – US oil demand is shown to grow strongly by around 0.5 mb/d. The bulk of the growth is captured

by the lighter and middle part of the barrel; LPG and distillates, gas diesel oil and jet kerosene for the

industrial and transportation sectors. Gasoline demand to date has been surprisingly weak, mainly as a

result of a decline in 1Q17. US oil demand in the short term is expected to be strongly determined – for the

remainder of 2017 and 2018 – by distillates usage and gasoline in the road transportation sector and, hence,

indirectly by fuel price levels. In addition, healthy economic activities are expected to support demand for

industrial and construction fuels. Thus, the overall implied positive future development of US oil demand has

skewed further to the upside since last month. Upside risks are derived in the projected growth of the

economy and oil usage in the transportation and industrial sectors, while fuel substitution and vehicle

efficiencies are the main downside risks.

-1,500

-1,000

-500

0

500

1,000

1,500

-1,500

-1,000

-500

0

500

1,000

1,500

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

tb/d

tb/d

Historical range

Historical average

2016

2017

Sources: National, Joint Organisations Data Initiative and

OPEC Secretariat.

-300

-200

-100

0

100

200

300

May 16

Jun 16

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

tb/d

Source: US Energy Information Administration.