JP Morgan Analysts Look at Global Oil Demand Growth

Global oil demand averaged 104.4 million barrels per day through September 17, marking a year over year increase of 520,000 barrels per day.

That’s what analysts at J.P. Morgan, including Natasha Kaneva, head of global commodities strategy at the company, stated in a research note sent to Rigzone by the JPM Commodities Research team recently, adding that the 104.4 million barrel per day figure “align[ed]… closely” with their monthly forecast.

“Year to date through September 17, global oil demand growth is tracking a 0.8 million barrel per day expansion against our estimate of 0.83 million barrels per day,” the analysts said in the note.

“Month to date, global oil demand has averaged 104.4 million barrels per day, tracking slightly below our estimate of 104.5 [million barrels per day] for September,” they added.

In the note, the J.P. Morgan analysts stated that most of the demand indicators for oil consumption outside the U.S. are showing a continued resilience.

“Chinese port activity remains robust, highlighted by a seven percent year over year increase in container throughput during the first week of September, signaling healthy export demand,” they noted.

“Globally, daily flights expanded by 2.6 percent compared to last year, though the pace has moderated relative to previous months. While flight volumes in the U.S. and China are easing as the summer travel season winds down, activity in Europe, the Middle East, and Latin America continues to grow,” they added.

“On the industrial side, imports of petrochemical feedstocks in East Asia have stabilized, following a recovery in July and August after a June slump,” they continued.

The analysts went on to state that, “in the U.S., container arrival volumes are decelerating, with September arrivals expected to be 10 percent lower than last year, according to data from the Port of Los Angeles”.

The J.P. Morgan analysts warned in the research note that “early signs are signaling that this decline is likely to extend into October”.

“Furthermore, global cargo flight volumes have fallen to a 20-month low following the termination of the de minimis exemption in the U.S. last month, further dampening overall activity and creating additional headwinds for U.S. jet fuel demand,” they analysts added.

In a research note sent to Rigzone by the JPM Commodities Research team on September 4, J.P. Morgan analysts, including Kaneva, said global oil demand averaged 105.2 million barrels per day in August.

“Global oil demand in August remained steady at an average of 105.2 million barrels per day, marking year over year growth of 520,000 barrels per day, trailing our monthly forecast by 50,000 barrels per day,” the analysts stated in that note.

“Year to date, global oil demand growth has increased by 0.8 million barrels per day, just shy of our projected 0.82 million barrels per day,” they added.

The analysts went on to highlight in that note that, “regionally, oil consumption in East and Southeast Asia rebounded from May’s lows and continued its upward trajectory through August”.

“Export activity in these regions has been buoyed by lower than anticipated tariffs, helping to sustain momentum,” they added.

“Meanwhile, port operations in both China and the U.S. remain steady, as evidenced by increasing container volumes,” they continued.

“Seasonal travel demand has exceeded expectations globally, with daily flights rising 3.8 percent year over year. In the U.S., total air passenger throughput in August climbed one percent compared to the same period last year, according to TSA data,” they analysts went on to state.

J.P. Morgan highlighted in its research notes that its global demand tracker “calculates implied demand formulated as: daily total oil product demand = total refinery output + biofuels blending + daily net imports of products + daily change in products stocks”.

On its site, J.P. Morgan describes itself as a leading global financial services firm with assets of $3.9 trillion and operations worldwide. The company has “a legacy dating back to 1799”, its site points out.

To contact the author, email andreas.exarheas@rigzone.com