Worldwide Oil Demand Is Accelerating Fast
World oil demand surged in the first six months of 2015 compared with the same period in 2014, according to national estimates submitted to the Joint Oil Data Initiative (JODI).
Petroleum demand is responding in the expected manner to a halving in the price of crude and significant declines in the price of most fuels in most consuming countries, as well as continued economic expansion in much of the world.
Fifty-nine countries, accounting for 75-80 percent of global oil consumption, have submitted demand estimates for both the first half of 2014 and 2015 to JODI.
Submitters include all the world's major consumers, with the notable exceptions of Russia, Iran, Indonesia, Venezuela, Malaysia, South Africa and United Arab Emirates.
Submitters reported consumption averaged 71.4 million barrels per day (bpd) in the first six months of 2015, up from 69.1 million bpd in the prior-year period, an increase of 2.3 million bpd or 3.3 percent.
China accounted for slightly over half the total increase, with reported consumption of petroleum products up by 1.3 million bpd, more than 13 percent.
Other countries reporting substantial increases in demand included the United States (+470,000 bpd), India (+205,000 bpd), Turkey (+180,000 bpd), Saudi Arabia (+115,000 bpd) and Korea (+100,000 bpd).
Smaller increases in demand were reported by Germany (+20,000 bpd), France (+18,000 bpd), Britain (+29,000 bpd), Italy (+74,000 bpd), Spain (+26,000 bpd), Argentina (+40,000 bpd) and Poland (+40,000 bpd).
The increase in demand was broadly based, with 46 out of 59 countries in the data set reporting increased consumption in 2015 compared with 2014.
JODI is a partnership between the International Energy Forum, based in Riyadh, and six international and regional statistical agencies (IEA, OPEC, Eurostat, APEC, OLADE and UNSD).
The limitations of JODI data are well known and acknowledged by the partner organisations, but for many countries, especially the top 30 producers and consumers, "timeliness, coverage and reliability are at reasonable levels", according to the secretariat.
There are several obvious caveats with the increase in petroleum demand reported by JODI. The first and most obvious is the enormous increase in reported fuel consumption in China, where the quality of the data is less reliable than in many other countries.
Without China, the reported increase in consumption is a little over 1 million barrels per day, or around 1.7 percent.
There are major doubts about the amount of fuels and especially crude disappearing into the country's strategic stockpiles.
China's national estimates may overstate oil demand, perhaps significantly, but the growth in the country's consumption is unlikely to have been zero.
So the probable envelope for oil demand growth lies between 1.0 million bpd (if China's consumption has been flat) and 2.3 million bpd (if China's consumption has grown as much as its own data show).
The midpoint of the range is 1.65 million bpd, roughly in line with the 1.7 million bpd demand increase the International Energy Agency (IEA) is projecting for the world as a whole in 2015 ("Oil Market Report" Sep 2015).
Confidence in this range estimate is bolstered because the increase in reported demand outside China is so broadly based and there could be further increases in countries accounting for as much as 20 percent of global demand.
There is reason to doubt demand allocations to individual countries (for example the surge in Italy, which is three times the size of the increases reported in Britain, France or Germany).
National statistical agencies may be struggling to discern between domestic consumption, exports and stock increases.
But because the rise in demand is being reported in so many countries at the same time, it is unlikely to be a major error at global scale (national errors allocating between domestic and export demand should cancel out to some extent).
Some of the increase in reported demand may actually be going into increased stocks held by refiners, distributors and end customers.
But the continued strength of fuel prices and refining margins suggests that stocks have not built up to unwanted levels.
According to the IEA, oil demand is climbing at the fastest rate in five years, and the national statistics collated by JODI appear to bear out that conclusion.
- Published on:
- September 30, 2015
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