Petroleum product demand in early 2015 bears out ESAI Energy’s expectations of more robust demand growth this year, according to the firm’s recently released Global Fuels Outlook. Global oil demand is projected to increase 1.4 million b/d in 2015, 400,000 b/d more than in 2014. Despite strong demand, the product markets are increasingly oversupplied.

Demand is returning to the middle of the barrel with a bang. Developments in key OECD countries, China and India point to robust diesel demand in 2015. The acceleration of demand growth is in line with ESAI Energy’s expectations. Global demand for diesel is now projected to increase 530,000 b/d in 2015 compared to less than half that amount in 2014. ESAI Energy forecasts global gasoline demand growth to accelerate by 50,000 b/d to 420,000 b/d this year. This accelerating demand is the principal reason overall oil demand growth will be much higher this year than in 2014.

The report outlines the key developments driving petroleum product demand growth. “Trends in China and India put Asian diesel demand on track to grow 140,000 b/d this year compared to less than 50,000 b/d last year,” comments ESAI Energy Principal Andrew Reed. “In the Atlantic Basin, OECD countries are driving demand growth.”

OECD gasoline demand is also responding positively to lower prices around the petroleum complex. Nearly all OECD demand growth will concentrate in OECD Americas, and the U.S. in particular. ESAI Energy forecasts U.S. gasoline demand to rise more than 150,000 b/d this year. In OECD Europe and Asia, meanwhile, secular trends in demographics, dieselization and fuel efficiency will only permit demand declines to be “less worse.” The shift will, nevertheless, contribute to an overall increase of OECD gasoline demand of 140,000 b/d in 2015, versus just 10,000 b/d last year.

 “Improvements in OECD gasoline demand are coupling with demand strength in other oil importing countries such as India to encourage higher global consumption,” notes ESAI Energy analyst John Galante. “However, anemic demand growth in some key emerging markets and commodity exporting regions is holding back the global total,” Galante adds.

The implications for the refining sector and crude demand are mixed. High demand is one reason refining margins have been quite high so far this year. Yet, high gasoline and middle distillate stocks are evidence that product markets are oversupplied, which will eventually catch up with refiners and limit crude demand.
Source: ESAI Energy