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51

OPEC bulletin 2/18

Monthly Oil Market Report

O P E C

12 February 2018

Feature article:

Review of recent global oil demand trends

Oilmarkethighlights

Featurearticle

Crudeoilpricemovements

Commoditymarkets

Worldeconomy

Worldoildemand

Worldoilsupply

Productmarketsand refineryoperations

Tankermarket

Oil trade

Stockmovements

Balanceofsupplyanddemand

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February

2018

Review of recent global oil

demand trends

World oil demand growth exceeded 1.40 million bar-

rels/day for the third consecutive year to register an

increase of 1.6m b/d in 2017. Total global demand is

now near the 97.0m b/d threshold. Cumulatively, be-

tween 2015 and 2017, the world has added around 5m

b/d of demand for oil products on the back of healthy

economic conditions globally and a relatively steady

product price environment.

OECD Americas’ oil demand grew by a healthy

230,000 b/d in 2017, driven by the solid economic

momentumwhich supported light and middle distillate

consumption.

In OECD Europe and Asia Pacific, following stable

growth in the past two years, oil demand remained in

positive territory in 2017, collectively rising by 230,000

b/d. Improvements in the economy, healthy petrochemi-

cal and transportation sectors, and colder than normal

temperatures earlier in the year lent support to oil de-

mand growth.

In non-OECD, China’s oil demand growthwas robust

in 2017, increasing by nearly 500,000 b/d as the pet-

rochemical and the transportation sectors continued to

expand at a healthy pace.

Oil demand growth in Other Asia — primarily India

— increasedby 230,000b/d, this is despite slower-than-

expected oil demand growth from India in 1Q17, post

demonetization. Meanwhile, Latin America and Middle

East oil demand growth flipped into positive territory in

2017, with the two regions adding a combined 130,000

b/d, on the back of an uptick in economic conditions

in Brazil, along with firm growth in some countries in

Middle East.

For 2018, the major assumptions accounted for in

the oil demand forecast include: a steady rise in global

economic activities, which are projected to increase by

3.8 per cent y-o-y; transportation fuels — namely gas-

oline, jet fuel and diesel oil — are anticipated to pro-

vide the bulk of growth

in 2018, propelled by

steady vehicle sales

in the US, China and

India; and capacity

additions, as well as

expansions in petro-

chemical sector pro-

jects, which are ex-

pected to provide

support to light

distillates require-

ments, mainly in

the US, and to a lesser ex-

tent in China.

Conversely, oil demand is assumed to be limited by

a number of factors, namely: the level of substitution

with other fuels in OECD Americas, Asia Pacific, and the

Middle East; a steady increase in efficiency gains, and a

reduction in subsidies, which are anticipated to reduce

oil demand in the Middle East, but mitigated by higher

household income. Finally, the degree of digitalization

and technological development in various sectors is also

expected to relatively cap oil demand growth in 2018.

As a result, oil demand in 2018 is projected to grow

by 1.59m b/d, broadly to reach 98.6m b/d. The OECD

is foreseen to rise by around 320,000 b/d, with OECD

Americas and Europe being firmly in the positive, while

OECD Asia Pacific is anticipated to decline. In the non-

OECD region, growth is forecast at 1.26mb/d, withChina

being the major contributing country to overall growth,

followed by Other Asia, including India.

Recently, healthy and steady economic development

in major global oil demand centres was the key driver

behind strong oil demand growth. This close linkage

between economic growth and oil demand is foreseen

to continue, at least for the short term.