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Annual Report 2016

OECD demand

OECD Americas

In OECD Americas, improvements in macro-

economic indicators, supported by a low oil price

environment, boosted transportation fuel con-

sumption in the US. However, growth levels in oth-

er countries in the region — particularly Mexico and

Canada — declined. In the US, 2016 ended with

positive oil demand growth, up by around 1.0%

year-on-year (y-o-y). This is particularly the result of

higher transportation fuel requirements for gaso-

line and jet fuel. Middle distillates in 1H16 shrank

by around 0.2 thousand barrels per day (tb/d) y-

o-y, as weather conditions were warmer than ini-

tially anticipated, reducing heating fuel demand.

However, 2H16 experienced a rebound in middle

distillate requirements as demand was supported

by heathy improvements in industrial activity and

overall economic activity.

OECD Europe

In OECD Europe, 2016 oil demand surprisingly

expanded by around 0.25 mb/d, with gains distrib-

uted almost equally between the four quarters. Oil

prices propelled oil consumption. Overall, oil de-

mand in all of the four big consumers — Germany, UK,

France and Italy — grew in 2016 by around 80 tb/d,

with the UK and Germany expanding the most. In the

product mix, transportation fuels — which include au-

tomotive diesel and gasoline — led growth, mainly as

a reflection of positive vehicle sales throughout the

year of 7% (y-o-y). This, along with the lower oil price

environment, encouraged economic growth. How-

ever, demand for transportation fuels was somewhat

capped, as progress in efficiency standards, the use

of alternative fuels and policies of high taxation in

major European consuming countries negatively af-

fected growth.

OECD Asia Pacific

Oil demand rose in 2016 for the OECD Asia Pa-

cific region, mainly as a result of better-than-expected

demand growth in South Korea and less shrinkage in

Japanese oil demand growth data. The flourishing

petrochemical industry, notably in South Korea, cou-

pled with improvements in power generation require-

ments in support of expanding economic activities,

allowed for oil requirement levels to be higher on

an annual basis for the first time since 2012. On the

other hand, the year saw a drop in oil consumption

in Japan of around 0.13 mb/d. Negative growth was

apparent for nearly every month of 2016, with the ex-

ception of November, when demand inched up due

to higher petrochemical feedstock requirements and

colder-than-anticipated weather. From a products

point of view, LPG and naphtha were the leading

fuels, as petrochemical margins encouraged higher

utilization rates in the petrochemical sector. Fuel oil

also received strong support from the power genera-

tion sector, particularly in South Korea.

Non-OECD demand

Other Asia

Oil demand in the highest-consuming nation

of the region — India — rose compared with 2015,

showing an annual surge of around 0.31 mb/d.

Indian oil demand growth was led by increases in

oil consumption for the road transportation and

residential sectors. Gasoline demand grew sharply

in the transportation sector. Similarly, LPG usage

increased in the residential sector. Sharp gains in

the sale of vehicles — particularly two-wheelers —

in combination with a growing economy, supported

the rise in gasoline demand. Strong LPG usage in

the residential sector has, in fact, a long tradition

in India and is additionally supported by subsidized

LPG cylinders. Fuel oil requirements in the agricul-

ture and power generation sectors gained some

momentum and rose above the previous year’s lev-

els, showing positive performance in 2016. Growing

construction activity led to additional demand for

the heavy part of the barrel, particularly bitumen

for road construction. Meanwhile, naphtha fed the