US oil demand growth to surpass China for first time since 1990s:
Goldman Sachs
Singapore (Platts)--9Dec2013/327 am EST/827 GMT
Oil demand growth in the US this year is likely to exceed that of
China's for the first time since the 1990s, skewing overall global
demand in favor of developed markets, investment bank Goldman Sachs said
in a new report released Friday.
"In 2013, it was emerging market demand that disappointed while
developed market demand not only surprised to the upside ... while
European demand actually grew last quarter," according to analysts led
by Jeffrey Currie, Goldman's global head of commodities research.
The bank said China's oil demand growth had slowed to just 230,000 b/d
year on year from January to October because of its stable GDP growth
and moderation of industrial production gains.
Overall oil demand growth in China is expected to average 267,000 b/d
this year, down from 417,000 b/d last year.
US oil demand had been in decline since 2011, but recent data
suggests oil demand growth stabilizing this year. In September, demand
increased by over 1 million b/d year on year, the highest level since
January 2001, resulting in US oil demand in Q3 expanding twice as fast
as China's, Goldman pointed out.
This was driven by a combination of a pick-up in US economic activity, a
limited number of tropical storms, a slowdown in energy efficiency in
the transport sector and lower fuel prices, Goldman said.
Oil demand growth in the US this year is expected to reach 343,000/d,
compared with a contraction of 407,000 b/d in 2012, according to
Goldman's forecast.
This means that China's lack of demand growth has impacted its appetite
for oil while the surge in US oil demand has largely been met by
absorbing its own domestic shale oil production, resulting in both
countries slowing their respective impacts on the global balance, the
bank also said.
In Europe, data from the International Energy Agency suggests that oil
demand has also stabilized recently from relatively large year-on-year
declines in the first half of 2013, again in line with economic
recovery, the bank said.
It predicts that this resulting "resource rotation" back towards a
market driven by developed economies will continue over the next two
years as China embarks on substantial structural reforms and other key
emerging countries such as India and Indonesia deal with domestic
slowdowns.
EMERGING MARKET GROWTH SLOWING
Similarly, the weakness in India's oil demand growth was acute in Q3, as
the depreciation of the rupee resulted in higher domestic fuel prices
and weighed heavily on diesel demand growth, Goldman noted.
It estimated that Indian oil demand declined about 100,000 b/d in Q3,
the largest quarterly contraction since 2001.
All this resulted in non-OECD oil demand expanding by 220,000 b/d year
on year in Q3, only 90,000 b/d more than in OECD countries, Goldman
said.
"Not only is US demand growth beginning to lead global oil demand after
years of EM [emerging market] demand leadership, but US demand is no
longer the margin of adjustment to higher prices as EM currency
devaluations make many EM countries extremely exposed to higher oil
prices after a decade of the reverse," Goldman said. GLOBAL DEMAND
GROWTH HIT BY CURRENCY DEVALUATIONS
The recent stabilization in developed markets' oil demand has, however,
not been sufficient to offset oil demand weakness in emerging countries,
which will likely continue to suffer from economic slowdowns and broad
currency depreciations in 2014, Goldman said.
Along with India, Brazil, Turkey, South Africa and Indonesia -- which
collectively accounted for 9.5 million b/d of oil demand this year --
have also devalued their currencies by double-digits since the start of
the year and further depreciations of between 10%-30% are likely to
come.
The currency woes, along with restrained domestic demand in emerging
economies, means global oil demand growth will likely reach 1.35 million
b/d next year. While this is up from the 2013 global growth estimate of
840,000 b/d, it is 125,000 b/d less than what would be implied based on
the bank's global GDP growth forecast of 3.6% for next year.
Goldman is forecasting 1.21 million b/d of oil demand growth in non-OECD
countries next year, while OECD economies will only see demand expand by
142,000 b/d, largely because of an expected 207,000 b/d decline in
Japanese oil demand as its nuclear power plants start coming back online
next year.
Broken down regionally, Goldman expects US oil demand to grow by 210,000
b/d in 2014, while European oil demand will expand by 43,000 b/d,
compared with a 155,000 b/d contraction this year.
Latin American oil demand growth will remain stable at 158,000 b/d next
year while total Asia-Pacific growth will rise to 445,000 b/d in 2014,
from 246,000 b/d this year.
China's overall oil demand will grow by 300,000 b/d in 2014, limited by
stagnant gasoil demand growth as industrial production gains are likely
to remain at 2013 levels, Goldman said.
While real GDP will likely continue growing in India, oil demand will be
capped by further anticipated depreciation of the rupee and gradual
removal of diesel price subsidies. Goldman expects overall oil demand in
India to rise 44,000 b/d next year, from 11,000 b/d in 2013 but starkly
lower than the 151,000 b/d increase in 2012.
--Song Yen Ling,
yenling.song@platts.com
--Edited by Geetha Narayanasamy,
geetha.narayanasamy@platts.com
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