World Oil Demand is projected to be stable in 2016: OPEC MOMR

(MENAFN- Emirates News Agency (WAM)) World oil demand growth in 2015 now stands at 1.38 mb/d, after an upward revision of 90 tb/d due to a higher-than-expected performance by OECD, Americas and Europe in the 1Q and 2Q, OPEC said in its Monthly Oil Market Report.

''In 2016, world oil demand is projected to grow at the same level projected last month, up by 1.34 mb/d from 2015 levels, according to the MOMR.

Highlights of the MOMR: OECD Americas Following increasing oil requirements for all months since November 2014, US monthly oil demand data remained on a positive upward trend. US oil demand in May rose by 3.3% compared with the same month in 2014.

However, within products, the picture was mixed. Distillates and residual fuel oil demand declined, basically as a result of falling industrial production and fuel substitution. However, this was more than offset by higher requirements for gasoline and, jet fuel, as well as propane/propylene. May gasoline demand remained bullish a compared with the same month last year, as a result of increasing mileage and a lower fuel price environment, despite ongoing improving fuel efficiencies.

Five months into 2015 showed US oil demand higher by around 0.48 mb/d compared with the same period in 2014, with the main characteristics being growing requirements in all the main product categories, particularly road transportation fuels, gasoline distillate fuel and jet fuel, while propane/propylene demand remained stagnant. These developments are in line with the low oil price environment.

Preliminary weekly data for June and July show a continuation of the current picture € rising gasoline and distillate fuel requirements being partly offset by declining residual fuel oil demand. This, in turn, has led to a solid increase in total oil demand € up by 2.9% in June and 1.7% in July over the same month last year.

US oil demand in 2015 remains strongly dependent on the development of the US economy, but is once more skewed to the upside, compared with last month's projections, mainly as a result of expectations for increasing oil usage in the road transportation sector. The US is also considered to be the main contributor to OECD oil demand during 2015.

In 2016, US oil demand projections are unchanged and indicate a slightly lower growth rate than in 2015, increasing by 0.28 mb/d.

In Mexico, June 2015 marked the first month this year whereby oil demand requirements increased. Mexican oil demand in the month rose by almost 2.3% y-o-y, led by strong gasoline and LPG requirements. The only product category seen in the negative was residual fuel oil.

In 2015, Mexican oil demand is expected to decline slightly y-o-y, while for 2016 it is projected to remain almost at the same level as in 2015. Both projections, which are unchanged from last month, come with risks that are equally balanced to the upside and downside.

Decreasing manufacturing activity and lower demand for transportation fuels led to an overall 6.6% y-o-y decrease in Canada's oil requirements for May, following a similarly weak period from January to April. Projections for Canadian oil demand in 2015 leave oil requirements slightly lower than those seen in 2014.

For 2016, Canadian oil requirement growth is projected to slightly exceed 2015 levels.

In 2015, Americas oil demand is projected to grow by 0.30 mb/d over the previous year. In 2016, OECD Americas oil demand is forecast to be 0.33 mb/d higher than in 2015.

Europe European oil demand continued its increasing pattern in June y-o-y. However, the increase was smaller in volume than in previous months, particularly 1Q15, which was influenced by the cold weather and some low baseline effects. Continuing economic concerns in some parts of the region continue to pose some uncertainty as far as the development of regional oil demand for 2015 and 2016 is concerned, and despite some positive developments during the last weeks.

Data for the first six months of 2015 showed European Big 4 oil demand increasing by approximately 2.1% y-o-y, with transportation and industrial fuels accounting for the bulk of the rise. Strong demand for road transportation fuels is in line with the positive momentum seen in auto sales, which showed a solid increase of around 8% during the first half of 2015 y-o-y, with expansions in all the major auto markets.

General expectations for the region's oil demand during 2015 seem to have improved since last month's projections, but are coupled with large uncertainties that depend on the region's economic developments. Moreover, high taxation polices on oil use and fuel substitutions are factors that will continue to curb oil demand.

Expected improvements in the economy of some countries during 2015, in combination with the low historical baseline and a low oil price environment, lead to an assumed forecast increase in oil demand of around 0.11 mb/d during 2015. In 2016, European oil demand is projected to decrease slightly by 0.01 mb/d.

Asia Pacific Japanese oil demand increased slightly by 0.05 mb/d in June y-o-y, with a mixed picture for the main product categories. Demand for naphtha, LPG and distillates rose strongly, while oil requirements in all other product categories fell.

Ahead of the re-opening of the first nuclear plant since 2011, direct crude and fuel oil burning for electricity generation increased y-o-y, as a result of relatively warmer temperatures in June. The outlook risks for Japanese oil demand this year are skewed more towards the downside, as a result of indications towards the restart of some nuclear reactors.

Oil demand projections for 2016 imply a declining trend with the risks also being skewed to the downside.

In South Korea, May oil demand decreased by 1.4%, y-o-y. All the main product categories were seen declining, with the exception of distillate fuel. Losses were also observed in products used in the petrochemical industry, LPG and naphtha, as well as transportation fuels. However, the outlook for South Korean oil consumption during the remainder of 2015 and 2016 remains upbeat with the uncertainty of these projections pointing to the upside as a result of the positive expectations of the country's economy.

OECD Asia Pacific oil consumption is projected to fall by 0.12 mb/d in 2015, while in 2016 the decline will be slightly more at 0.13 mb/d, y-o-y.

Latin America In Brazil, total oil demand for the month of June was surprisingly healthy, despite the economic downturn witnessed in the country. Oil demand rose by around 0.12 mb/d or more than 5% y-o-y, with all product categories demonstrating good performance, with the exception of fuel oil, gasoline and jet/kerosene.

In 2016, projections for oil demand growth in Latin America are unchanged from last month's report with anticipation of some improvement over the growth levels of 2015.

Brazil is projected to be the main contributor to growth. However, transportation fuels should be supported as a result of the 2016 Olympic Games. Additionally, construction and industrial fuels are expected to be the main growth contributors.

Latin America's oil demand is expected to grow in 2015 by 0.12 mb/d. During 2016, Latin America's oil demand is forecast to increase slightly to reach 0.15 mb/d.

Middle East In Saudi Arabia, June oil demand was characterized by continuing healthy growth. All product categories increased during the month, with the exception of gasoline and diesel oil. Strong increases were registered in fuel oil for power generation, jet/kerosene and direct crude burning, which increased by more than 18%, 11% and 8% y-o-y, respectively.

Weather conditions turned out to be hotter than initially anticipated with cold degree days 3% higher y-o-y. This allowed, on the one hand, for additional air conditioning usage and more consumption of fuel oil, as well as direct crude for burning, and, on the other hand, marginally less consumption of road transportation fuels. Air traffic activities were also higher, especially over the month of Ramadan, when air flights seasonally peak. In June, total oil demand in Saudi Arabia reached close to 3.0 mb/d with oil demand growth remaining healthy at around 0.15 mb/d, or more than 5% y-o-y.

In Iraq, oil demand requirements in June increased for the first time since June 2014.

Total oil demand rose by more 10% y-o-y with all product categories registering positive growth, with the exception of LPG and diesel oil. Moderation in the base line numbers can be assumed as the reason behind this growth as total consumption is now at around 0.64 mb/d, having reached more than 0.84 mb/d at the end of 2013.

For 2015, Middle East oil demand is expected to grow by 0.19 mb/d, while oil demand in 2016 is projected to increase by 0.21 mb/d.

China China's oil demand came in stronger than initially expected in June with 0.49 mb/d growth y-o-y, which was higher than the average oil demand growth in 2014 of around 0.40 mb/d. Total consumption reached 10.90 mb/d, according to the Secretariat's calculations.

Oil demand growth was mostly determined by increasing LPG usage in the petrochemical industry and gasoline in the transportation sector, with both growing by more than 13% and 8% y-o-y, respectively. LPG demand growth continued its anticipated gains, recording an increase of around 0.14 mb/d y-o-y, taking total consumption to approximately 1.2 mb/d. It was supported by a number of startups and ramp-up operations in a number of propane dehydrogenations plants (PDH) around the country.

For 2016, oil demand for the transportation and industrial sectors is projected to continue rising, along with passenger car sales. Slightly lower GDP growth compared with 2015, a continuation of fuel quality programs targeting fewer emissions, and the continuation of fuel substitution with natural gas and coal are factors to be watched.

For 2015, China's oil demand is anticipated to grow by around 0.36 mb/d, while the expectation for 2016 oil demand growth in China is in the range of 0.33 mb/d