Global Oil Demand is picking up - July 1

[dan_s]

Amy Sergeant, CFA – Morgan Stanley
July 1, 2020 7:06 PM GMT

We track monthly demand data for seven "early reporters" covering 46% of global oil demand. Demand rebounded MoM but was down 4.7 mb/d YoY in May (-10%), with all countries down YoY except China and S.Korea. April was revised down to -9.2 mb/d as US demand was weaker than implied by weekly data.

Our global oil demand tracker monitors monthly government data from seven "early reporters" covering 46% of world demand and 70% of growth over the past few years. Data is collected for the US, China, India, South Korea, Brazil, Japan and Australia. Demand for the early reporters rebounded in May, up 3.7 mb/d MoM but still 4.7 mb/d lower YoY (-10%). China drove the MoM rebound although all countries except Japan showed some MoM improvement. If the 10% YoY decline was scaled up to global demand, it would suggest demand fell around 10 mb/d in May. The IEA has raised its 2Q demand estimate by 5 mb/d over the last two reports, now calling for an 18 mb/d decline across 2Q. China's implied demand reached a record high as refinery throughput recovered and refined product exports fell sharply. However, we expect some of this is likely to have been driven by large domestic stock builds where we lack visibility. South Korea also posted YoY growth driven by gasoline and diesel while all other countries reported YoY declines. In refined products, gasoline led the declines, down 3.3 mb/d (-22%) as many countries remained in at least partial lockdown. The Apple mobility driving data has been rising but these may be overstating the recovery in gasoline demand. On a percentage basis, the largest decline was still in jet fuel/kerosene demand which fell 1.5 mb/d or -45% YoY. Diesel has held up better, falling by 10% (-1.2 mb/d) but has faced supply challenges as refiners divert jet fuel molecules. More recently, higher gasoline cracks have likely incentivsed yield switching back to gasoline from diesel. Refinery runs were down 4.8 mb/d YoY in the seven early reporters (-11.3%),