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Wednesday, September 26, 2018

The tanker market will depend on China and the US - IEA

In its latest April Oil Market Report, the International Energy Agency (IEA) has left its forecast of 2004 global oil demand growth little changed, with only a minor upward adjustment of 0.03 mbd to 1.68 mbd.

However, the timing of demand growth for 2004 has been more substantially adjusted. The forecast for 2nd quarter demand has been raised by 0.26 mbd with China accounting for the bulk of the increase. This gain more than offsets a 0.08 mbd cut in 1st quarter demand due to lower-than-expected Japanese power generation requirements. Taken together, the two adjustments point to a shallower-than-expected seasonal drop in demand of 2 mbd from the 1st to the 2nd quarter, compared to a seasonal drop of 3.08 mbd in 2003.

China’s fast-rising energy consumption is fuelling most of the growth in world oil demand. Preliminary data suggest that Chinese demand surged more than 0.9 mbd in the 1st quarter, a gain of nearly 18% year-on-year. Robust end-user demand and the reappearance of tight primary stocks, including localised product shortages, suggest that 2nd quarter demand may again exceed expectations, despite seasonal maintenance at several large refineries.  A sustained increase of 0.9 mbd over the whole year would mean the need for the equivalent of more than 20 VLCCs, depending on where the oil is loaded.  Looking at the 10 largest crude suppliers to China in February, China took 43% of crude oil import from the Middle East, 29% from Africa, 9% from Asia, and 6% from Russia (by train). The balance of 13% probably mainly came from other Middle East and African countries. However, the increasing oil imports place a great strain on China’s currency reserves and efforts to limit oil imports must be expected. For further detail on China’s oil imports see INTERTANKO’s website

In the OECD area, robust growth in North American demand, led by continued gains in US gasoline, has been offset by contractions in the Asia-Pacific region, reflecting the reversal of last year’s surge in Japanese demand from electricity utilities.

North American oil demand is expected to grow by 1.2% (0.3 mbd) in 2004 (2% in 2003). According the weekly figures from US/DOE/EIA, US crude oil imports have been quite steady around 9.9 mbd since mid 2003.  UScommercial and strategic stocks have both been building up. Total US stocks have been increased by 68 m barrels over the last year, according to the US Energy Information Administration (EIA), which represents some 34 VLCC loads. US gasoline imports surged in the last week of March to 1.226 mbd, the highest weekly imports ever.

US crude figures

US gasoline figures

European oil demand is expected to maintain the same growth rate in 2004 as in 2003 -  0.9% or 0.14 mbd. With increasing Russian oil exports, in particular from the Baltic, increasing European demand may be expected to be satisfied by Russia.

OECD Pacific (mainly Japan) oil demand is expected to fall by 1.8% (-0.16 mbd) in 2004 after having increased by 1.5% (0.13 mbd) in 2003. Chinese demand is expected to increase by 12.8% (0.7 mbd) this year after having grown by 11.1% (0.55 mbd) in 2003. Other Asia is expected to grow by 5.3% (0.42 mbd) after having increased by 2% (0.15 mbd) in 2003. FSU oil demand is expected to decline by 3.1% (-0.11 mbd) this year after having grown by 3% (0.11 mbd) in 2003. Oil demand in the Middle East is forecast to grow by 4.9% (0.26 mbd) in 2004 following a growth of 2.8% (0.14 mbd) last year. Other areas are expected to have only a small growth. Taken all together this produces a forecast of  2.1% (1.68 mbd) growth in 2004 world oil demand. 2003 growth was also 2.1% (1.6 mbd).

To view the latest developments in the world oil supply and demand please use the following link on the INTERTANKO website

ContactErik Ranheim