+(91-22) 61772000 (25 Lines)
   |   GST ID : 27AAECS6989F1ZS
   |   CIN : U72200MH2000PTC125470

World Oil Demand - September 2005

Petrochemical industry | 29 Sep 2005 IST | Polymerupdate.com
Thursday, September 29, 2005

Forecast for 2005
World oil demand growth this month has been revised down for the fifth consecutive time after peaking in April of this year. Despite the constant revisions, world oil demand growth estimates have been relatively stable in comparison with other years oscillating within the 1.45-1.75 mb/d range. This month’s downward revision is, in part, the result of the latest data coming in from major consuming countries which shows low growth demand rates for the first half of the year, especially from USA and China. The initial effects of Hurricane Katrina have also been factored in; nonetheless it is important to emphasize that the revisions to demand growth are driven by factors such as high oil prices, higher domestic product prices in several developing nations as well as changes in policy being implemented in several Asian nations. It is yet too early to attempt to assess the impact of Hurricane Katrina on oil demand; however, the initial effects of loss in consumption are estimated at around 0.1-0.2 mb/d for the current as well as the coming month, but the expected massive reconstruction process that will follow might quickly reverse or at least diminish the initial consumption loss. On the economic side, with the economy of the two most affected states (Louisiana and Mississippi) accounting for approximately 3% of total US GDP, the impact on the US economy and the spill over effect to the demand for oil and petroleum products should not be significant.

Therefore, total world oil demand in 2005 is projected to grow by 1.42 mb/d or 1.73% to average 83.49 mb/d. On a regional basis OECD oil demand is estimated to increase by 0.32 mb/d or 0.65% to average 49.79 mb/d, with the major share of the growth originating in the North American region. Oil demand growth is projected to suffer a minor contraction in Western Europe while OECD Pacific countries demand will rise by 1% y-o-y. Oil demand growth in Developing Countries is estimated to increase by 0.74 mb/d or 3.47% to average 22.13 mb/d, which makes up more than 50% of total world oil demand growth for the year. China’s consumption growth has once again been revised down and now stands at 0.30 mb/d or 4.6% to average 6.82 mb/d for the whole of 2005. Oil demand in the FSU and other Central European nations is projected to rise by 0.07 mb/d and 0.02 mb/d respectively.

Oil demand in the OECD region is forecast to rise by 0.65% or 0.32 mb/d to an annual average of 49.79 mb/d for the present year. Inland delivery of petroleum products for the period January-June shows a disappointing 0.57% or 0.26 mb/d to average 45.79 mb/d. All major product categories with the exception of LPG and residual fuel oil showed gains. Inland consumption of gasoil/diesel rose by 1.9%, while kerosene and naphtha deliveries increased by 3.04% and 3.27% during the six-month period. Gasoline showed a very marginal 0.11% rise while residual fuel oil and other products contracted by 0.06% and 1.7%. In the North American region inland deliveries of petroleum products rose by only 0.46% over the first half of the year. The consumption of naphtha increased by 3.85% while gasoil/diesel and gasoline deliveries rose by 1.96% and 0.73%, respectively. Latest figures released by the EIA for the period January - August 2005 indicate a marginal 0.18% growth in total petroleum product supply, a far lower rate than originally estimated. In Western Europe consumption shows no growth for the six-month period as increases in gasoil/diesel and kerosene were offset by the sizeable decline in gasoline and LPG deliveries. Surprisingly, delivery of petroleum products in OECD Pacific countries rose by 1.82% or 0.15 mb/d for the first six months of 2005. Naphtha and kerosene deliveries rose by 4.69% and 3.71% respectively while gasoline consumption grew by 2.72%.

Developing Countries oil demand is forecast to rise by 0.74 mb/d or 3.47% to average 22.13 mb/d for the whole of 2005. This month’s forecast demand growth has been revised down to reflect projected lower demand growth in Asia Pacific for the rest of the year. The economic impact of sustained high international oil prices on these countries has prompted the implementation of a series of measures designed to alleviate the negative effect of oil prices on their trade balances as well as their national budgets. Countries in Asia have recently started to lower or totally phase-out subsidies, which resulted in a hike in domestic retail product prices as well as encouraged fuel substitution. It is yet too early to assess the full impact of such measures on the consumption of oil and petroleum products in these countries due to the time-lag between implementation and impact. Nevertheless, we believe that consumption will be dampened towards the last month of the present year and the real impact of these measures will be felt during 2006. We reiterate once more the increasing risk that developing countries pose to any demand assessment due to the quality, availability and timeliness of the data. Extreme caution must be exercised as 0.74 mb/d, or more than half of the total 1.46 mb/d global consumption growth for 2005, is projected to originate in this group. Very preliminary figures for the first and second quarter of 2005, which show a 4.24% and 3.16% y-o-y growth, seem to substantiate the projections for the whole year.

Other Region’s apparent demand growth for the present year is projected to rise by 0.35 mb/d or 3.15% to average 11.64 mb/d – significantly lower than the 0.53 mb/d growth estimate given two months ago. The considerably lower projected consumption is entirely due to a hefty 0.07 mb/d downward revision to Chinese apparent demand growth. Latest figures on trade — one of the components of apparent demand — point to a sharp reduction in imports of petroleum products for the first seven months of 2005. For the period January-July, imports of petroleum products in China fell by around 30% or 0.22 mb/d. While crude imports for the same period rose by 4.4% or 0.10 mb/d, China’s total net trade of crude and petroleum products shows a decline of nearly 3% for the period. With indigenous crude production fairly flat during the first half of 2005, apparent demand for the first six months of the year shows a negligible 0.1% increase with respect to the same period of last year. It is important to reiterate that China’s apparent demand growth for the first half of 2004 was exuberant (20% y-o-y) and that it was not likely to see such high growth rates during the first half of this year; nonetheless, we still expect to see vigorous growth rates during the second half of this year based on healthy rates of economic growth and possibly the diminished use of inventories.

Forecast for 2006
Average world oil demand is forecast to grow by 1.52 mb/d or 1.82% to average 85 mb/d for 2006, a marginally lower estimate than that presented last month. The downward revision is due to a more pessimistic view of the world economy for the coming year. World GDP growth is now projected to rise by 3.9% next year with OECD Pacific, some developing economies and China showing lower than previously estimated rates of economic growth. Oil demand is forecast to grow in all regions, except for Other Europe, where demand is expected to remain flat compared to last year. OECD countries oil demand is projected to rise by 0.46 mb/d or 0.92% to average 50.25 mb/d for the whole of 2006. As usual North America will account for around 80% of the total gain in demand with the remaining increase expected to originate in Western Europe and OECD Pacific, where growth rates are projected at 0.4% for both regions. Following estimated growth of nearly 1 mb/d in 2004 and 0.74 mb/d in 2005, oil demand for Developing Countries is forecast to rise by 0.65 mb/d or nearly 3% to average 22.78 mb/d. Two regions (Asia and Middle East) will account for nearly 80% of the total group’s projected growth, with Latin America and Africa adding the remaining 20%. Finally, China and the FSU projections call for a 0.35 mb/d and 0.05 mb/d growth in consumption next year.

Source: OPEC
Note: This story has not been edited by The Polymerupdate Editorial team and is auto-generated from a syndicated feed.

Polymerupdate perpetual and fresh feed of latest happenings in the Petrochemical and Polymer Industry is presented through the Press Releases section, which help our clients to gain a good sense of the current trade environment. This information is instrumental for future strategies.

back to list