Crude oil demand to drop significantly in Asia

Baku, Azerbaijan, Oct.25

By Leman Zeynalova – Trend:

The increase in Asian refinery throughput and thus crude oil demand in the region will slow down significantly in the next two years, rising by only 400,000 barrels per day annually, according to the Two-Year Global Fuels Outlook of the Energy Security Analysis (ESAI), US-based global energy consulting company.

“This compares with over 700,000 barrels per day of increases in both 2015 and 2016. A slowdown in the increase in refiner demand for crude oil in Asia will do little to support crude oil prices, and just adds to the pressure on crude oil exporters to take action next month to rein in production,” said the report obtained by Trend.

The report shows that Asia’s net outflow of gasoline and middle distillate has crested.

In the next two years, the combination of lower exports of these products and modestly growing imports of other products will negatively impact the increase in Asian refinery throughput.

“Asian product markets are reaching an inflection point, and it begins with but does not end with India,” said ESAI Energy Principal Andrew Reed.

“India’s expansion of refining activity has led to record high exports of gasoline and middle distillate from that country. In the next couple years, however, refineries will not increase output as much as in the past, and more of those products will be supplied to the domestic market,” he added.

According to ESAI Energy’s outlook to 2018, as goes Indian product trade, so goes Asian product trade.

Asia’s middle distillate surplus, which exceeded 1.2 million barrels per day in 2015-2016, has crested and will decline by 180,000 barrels per day in the next two years, according to the report.

“The net outflow of gasoline matches the historical high of 260,000 barrels per day, but will decrease roughly 75,000 barrels per day,” said the company. “Falling net exports of these products will take place alongside the ongoing growth of Asia’s imports of low-value products like fuel oil and naphtha.”

“Until now, higher Asian exports of gasoline and middle distillate roughly offset increases in the region’s imports of other refined products, said Reed, adding that from the standpoint of product balances, this was stabilizing for Asian refinery throughput.

“Looking ahead to 2017 and 2018, more of the products Asia consumes will be produced elsewhere, which will sap crude demand in Asia,” said ESAI Energy principal.

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