World Oil Demand: Asia Surge Drives Demand Back To Pre-recession Levels in 2010
Demand Hits All-Time High in Q3 2010 at 88.3 Million Barrels a Day
EDINBURGH/SINGAPORE/HOUSTON, 8th December 2010 – World oil demand for 2010 is almost certain to exceed the previous all time high reached in 2007 according to provisional data for the third quarter of this year from Wood Mackenzie, the independent energy and metals research consultancy. It forecasts world oil demand in 2010 is likely to reach an annual average 86.7 million barrels a day (Mb/d) - 100,000 barrels a day higher than in 2007 - and demand is expected to grow further to 88.1 Mb/d in 2011. The analysis illustrates how the mature OECD and developing economies have diverged with the surge in growth coming from Asia and in fact 85% of the recovery this year is accounted for by emerging markets.
Wood Mackenzie’s Principal Oil Demand Analyst Mr Francis Osborne explains, “Even if some of the recent strength can be attributed to temporary factors, our latest Oils Research analysis confirms that world oil demand in the third quarter of 2010 will exceed the previous quarterly high of 88 Mb/d reached in Q4 2007. Just three years from the onset of the great recession, global oil demand has recovered to the pre-recession peak seen in 2007.”
Leading this recovery is China and the rest of Asia. Just one illustration that the growth story in these countries is alive and well, Wood Mackenzie’s provisional data through September shows that diesel and gasoil demand in China are continuing to grow at a rate of around eight percent per annum and gasoline demand at a similar rate. In India diesel and gasoil are growing at seven percent per annum and gasoline at eleven percent. As a comparison, Wood Mackenzie says that this year the Asian market will be 3 Mb/d larger than the North American market – in 2008 it was 1.4 Mb/d larger.
Mr Osborne says, “The impact of the recession on oil demand in the OECD and emerging markets could not be more stark: The global market for oil is diverging as never before. OECD demand fell by a total 3.9 Mb/d over the course of 2008 and 2009. On the other hand emerging market demand increased by 1.6 Mb/d. In 2010, the latter markets account for 85 percent of the recovery in demand and in 2011 and 2012 we expect 80 percent of the increase in global demand to come from these markets. By 2012 we expect OECD demand to still be more than five percent below pre-recession levels, while demand in the emerging markets will be 6.5 Mb/d higher.
“At the start of this year we had estimated that demand growth in 2010 would be of the order of 2 Mb/d, at the top end of industry expectations: it now looks as though it may be closer to 2.5 Mb/d, with 2010 looking like one of the fastest growing years on record. Only twice before in the past 30 years has demand grown as much as this, and in recent years, 2010 will be second only to the surge in 2004,” Mr Osborne continues.
“Given the doom and gloom that has surrounded the macro economic picture, at first sight the growth in demand in 2010 seems fairly remarkable but it reinforces the fact that while the economy in the mature OECD regions continues to struggle, and with it oil demand, in the emerging markets it has generally been full speed ahead on both fronts.“
Looking at total annual oil demand beyond this year, Wood Mackenzie forecasts total world demand to reach 88.1 Mb/d in 2011 – 1.5 Mb/d higher than in 2007 - and almost 90 Mb/d in 2012. “This year will see the recovery of all the demand lost during 2008 and 2009, while in 2011 world demand will be two percent above the peak pre-recession level hit in 2007. In 2012 demand will be almost four percent higher than this peak,” Osborne concludes.
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