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World Oil Demand

42

OPEC Monthly Oil Market Report – October 2017

Brazil

Brazilian oil demand

has been positive in 2017. On a cumulative basis, data up to August suggests

moderate growth in oil requirements of around 11 tb/d y-o-y, compared to a decline of around 80 tb/d y-o-y

during the same period last year.

The economic advantage of gasoline over ethanol played a big part in increasing gasoline demand growth in

every single month of 2017. Currency exchange and weather conditions are usually factors impacting

ethanol production. Farmers opted to produce sugar in lieu of ethanol as economics supported sugar

production, limiting ethanol availability and increasing its relative value compared to gasoline. Gasoline was

more economical for drivers as most vehicles in Brazil are equipped with dual-fuel engines that can burn

both fuels. Gasoline consumption was 52 tb/d higher than the same period last year, while ethanol demand

declined by similar quantities.

Diesel oil is flat on a year-to-date basis, despite y-o-y gains in June, July and August. These monthly

increases are indicative of improving economic conditions in the country as inflation rates, consumer

confidence and manufacturing PMI indexes are at stable, or rising, levels. As a result, diesel oil demand

from the industrial and transportation sectors has improved.

Fuel oil demand declined by more than 15 tb/d, or 4% y-o-y, on a cumulative basis. As with diesel oil,

strengthening economic conditions have contributed positively to fuel oil demand numbers as increased

consumption was observed in the power generation sector and in the use of fuel oil as a bunker fuel.

Table 4 - 7: Brazilian oil demand*, tb/d

Argentina

Oil consumption in

Argentina

was flat during the month of July 2017 at 0.72 mb/d, with mixed product

performance. All transportation fuels were in positive territory with the exception of diesel oil. Jet/kerosene

and gasoline increased by around 17% and 4% y-o-y respectively. Conversely, fuel oil recorded a drop of

15% y-o-y.

Looking forward, the risks for

2017

for

Latin America

are currently balanced with a projection for economic

improvement by the major consuming nation of the region, Brazil, which is anticipated to promote

government spending. The continuation of lower oil prices as well as unusual weather conditions should also

support for oil demand growth. Conversely, deteriorating economic conditions elsewhere in the region should

cap oil requirements.

In

2018

, projections are largely dependent on possible improvements for the overall economy of the region,

oil demand should also improve as a result, and the low baseline of comparison this year should provide

additional support. In terms of products, diesel oil and gasoline will have higher growth potential and are

expected to fuel the industrial and transportation sectors.

Latin American oil demand

is anticipated to increase by 47 tb/d in 2017. During 2018, oil demand growth is

forecast to be higher than 2017, recording growth of 85 tb/d.

Aug 17

Aug 16

tb/d

%

LPG

250

250

0

-0.2

Naphtha

144

143

1

0.7

Gasoline

759

722

37

5.1

Jet/kerosene

116

116

0

-0.4

Diesel oil

1,017

995

22

2.2

Fuel oil

121

90

31

34.9

Other products

358

396

-38

-9.5

Total

2,765

2,712

53

1.9

Change 2017/2016

Sources: JODI, Agencia Nacional do Petroleo, Gas Natural e Biocombustiveis and OPEC Secretariat.

Note: * = Inland deliveries.