JP Morgan Analysts Examine Global Oil Demand Growth

Year to date through November 4, global oil demand growth is tracking an expansion of 0.85 million barrels per day.

That’s what J.P. Morgan analysts said in a report sent to Rigzone by the JPM Commodities research team recently, adding that the expansion figure is 50,000 barrels per day below the company’s estimate of 0.90 million barrels per day.

Global oil demand averaged 105.8 million barrels per day in October, the analysts noted in the report, pointing out that demand “consistently trail[ed]…” their estimates by 50,000 barrels per day throughout the month. The analysts said in the report that, for the first four days of November, they estimate global demand averaged 105 million barrels per day. They noted that this was an increase of 450,000 barrels per day compared with the same period last year but 30,000 barrels per day below their forecast monthly growth of 480,000 barrels per day.

“High-frequency indicators suggest that U.S. oil consumption remains subdued, with travel activity declining as daily flights dropped seven percent week over week for the period ending November 3, largely due to the ongoing shutdown,” the analysts said in the report.

“Additionally, U.S. container arrivals for November point to an eight percent decrease relative to last year, marking the third consecutive month of annual decline,” they added.

“In East Asia, petrochemical feedstock demand continues to be softer than usual, while industrial activity in Germany has extended its downturn into a third consecutive month,” they continued.

The analysts also stated in the report, which was sent to Rigzone on November 5, that global total liquids stocks “rose by 29 million barrels last week, bringing the year to date increase to 385 million barrels”.

“Regionally, OECD liquid stocks have grown by 83 million barrels, while stocks in China have increased by 88 million barrels. Meanwhile, oil on water, floating storage, and stocks in the rest of the world have risen by 214 million barrels,” they added.

In a separate report sent to Rigzone by the JPM Commodities Research team on October 30, analysts at J.P. Morgan stated that global oil demand averaged 105.8 million barrels per day through October 28, which they pointed out was an increase of 250,000 barrels per day compared to last year’s levels but 50,000 barrels per day below their estimates.

“Year to date, demand has risen by 900,000 barrels per day, just shy of our projected growth of 910,000 barrels per day”, the analysts said in that report.

The J.P. Morgan analysts highlighted in that report that, “throughout October, global oil demand remained subdued, with the softness most apparent in U.S. gasoline consumption”.

“Despite a recent uptick over the past seven days, U.S. gasoline demand still lagged by 300,000 barrels per day, falling short of the anticipated 9.1 million barrels per day,” they added.

“In China, port cargo volumes declined by 0.3 percent year over year – the first decrease recorded this year – indicating that post-holiday momentum has yet to materialize. Meanwhile, global daily flights through October 28 rose five percent compared to year-ago levels,” they continued.

In this report, the analysts went on to state that global total liquids stocks “rose modestly by three million barrels last week, bringing the year to date increase to 356 million barrels”.

“Regionally, OECD liquid stocks have grown by 81 million barrels, while stocks in China have increased by 77 million barrels. Meanwhile, oil on water, floating storage, and stocks in the rest of the world have risen by 198 million barrels,” they said.

“Despite the overall build in global stocks, onshore crude oil inventories have declined consistently every month since June, falling at a pace of 51 million barrels, or 340,000 barrels per day,” the J.P. Morgan analysts went on to state.

In its reports, J.P. Morgan highlights 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”. It adds that its U.S. gasoline demand tracker “calculates daily implied gasoline consumption using the formula – implied gasoline demand = daily crude runs * U.S. gasoline yield + ethanol blending + net gasoline imports”.

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