The IEA’s monthly oil report out on Friday makes for familiar reading: non-OECD demand slightly stronger, partly offset by OECD demand being slightly weaker – resulting in a small upgrade in overall demand forecasts:
Global oil demand has been revised up by 70 kb/d for both 2009 and 2010 on higher‐than‐expected non‐OECD data, which largely offset persistently weak OECD readings. Demand is now estimated at 85.0 mb/d in 2009 (‐1.4% or ‐1.2 mb/d year‐on‐year), and is expected to rise to 86.6 mb/d in 2010 (+1.8% or +1.6 mb/d versus 2009).
That’s a downward revision of 120,000 barrels per day in 2010 for OECD countries, which are expected to see their fifth yearly decline in 2010.
However there were some other interesting comments on the OECD. There are signs of ‘a nascent petrochemical-led economic recovery’, the IEA writes, due to strong naphtha deliveries. But the signs are mixed, and some evidence of demand destruction was cited.
In the US, for example, demand for LPG/ethane and heating oil demand grew significantly in 2009, but most other products, including transport fuels, appeared to fall – despite signs of a resurgence in air travel (emphasis ours):
All of this points to an economic recovery led so far by restocking and rebounding industrial activity, rather than by re‐emerging consumer demand. Evidence of rebounding middle distillate demand tied to growth has so far been scant. One reason may stem from ongoing efficiency improvements. For example, even as revenue miles have climbed for US airlines, increasing load factors and restrictions on the number of luggage pieces on board, aimed at reducing overall weight, likely explain why jet fuel/kerosene demand is still shrinking.
An ‘oil-less’ recovery (FT Energy Source)