MOMR October 2017
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World Oil Demand

OPEC Monthly Oil Market Report – October 2017

39

The overall outlook for the remainder of

2017

is now equally balanced between the upside and the downside.

Economic activities are anticipated to be the largest supporter of demand growth as are the performance of

LPG as feedstock to newly commissioned PDH plants and the impact of the Golden Week holidays. The

implementation of measures against air pollution in major cities such as Beijing, Fujian and Chengdu and

substitution by other fuels such as gas are anticipated to dent oil demand growth going forward.

For

2018

, projections take into account assumptions such as rising demand for transportation and industrial

fuels, slightly lower GDP growth as compared to 2017, a continuation of fuel quality programmes targeting

fewer emissions and the continuation of fuel substitution with natural gas and coal.

Chinese oil demand

is projected to grow by 0.40 mb/d in 2017 and 0.35 mb/d in 2018.

India

Indian oil demand

declined in August 2017 for the

first time since March 2017 when cash limitations

caused by the demonization policy hindered

consumer spending. The decline was steep in

August at 0.25 mb/d – or around 6% y-o-y

compared to a year earlier, chiefly due to heavy

rains and floods as well as the higher base line of

comparison.

Slower-than-expected oil demand growth in June

and July had already moderated expectations for

Indian oil demand growth in 2017. These

expectations were exacerbated by August data. On

a cumulative basis, according to data from January

to August, oil demand in India shows a surprise dip

of around 20 tb/d as compared to the same period

a year earlier. The heavy monsoon season, the

introduction of the GST as well as lower consumer

spending in 1Q17 adversely impacted the

anticipated firm oil demand growth for the current

Graph 4 - 9:Indian gasoline demand,

y-o-y change

year. As a result, oil demand projections were adjusted lower by 0.1 mb/d in the 3Q17. For August 2017,

total product consumption reached 3.79 mb/d, dropping below the 4 mb/d for the first time in 2017. In terms

of products, diesel oil was the major source of decline, shedding 60 tb/d, or 4% y-o-y. Diesel oil consumption,

which accounts for around 40% of total Indian oil consumption, dropped to 1.55 mb/d in August. The

contraction in demand for diesel oil resulted from moderations in manufacturing activities as floods in many

areas of the country slowed trucking movements and construction work.

Gasoline demand also declined marginally in August for the first time since January 2017, by around 5 tb/d

y-o-y, while total product demand stood at 3.8 mb/d in August. Heavy flooding in Uttar Pradesh, Bihar,

Assam, Maharashtra and Uttarakhand caused the closure of businesses and schools for some days thereby

reducing miles travelled. Conversely, passenger car sales registered positive gains, rising by around 14%

y-o-y with two-wheeler sales continuing their double-digit growth, rising by 15% y-o-y.

Table 4 - 6: Indian oil demand by main products, tb/d

-40

-20

0

20

40

60

80

100

120

140

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

tb/d

Sources: OPEC Secretariat, and Petroleum Planning and

Analysis Cell of India.

Aug 17

Aug 16

tb/d

%

LPG

746

668

79

11.8

Naphtha

299

323

-25

-7.6

Gasoline

600

605

-5

-0.8

Jet/kerosene

279

324

-45

-13.9

Diesel oil

1,554

1,614

-60

-3.7

Fuel oil

254

273

-19

-6.8

Other products

56

229

-173

-75.7

Total

3,789

4,035

-247

-6.1

Sources: JODI, Petroleum Planning and Analysis Cell of India and OPEC Secretariat.

Change 2017/2016