‘India to surpass China as fastest growing oil market’
On the back of a 6 per cent demand growth, India will surpass China as the fastest-growing Asian market for petroleum products in 2018, says a report. This is possible as Chinese demand growth is seen halving to 2.5-3 per cent in 201718 from a higher 6 per cent in 2015-16. Despite the weakening growth numbers in both these countries, China and India will continue to be the key growth engines for the sector in Asia, representing over 80 per cent of the expected growth in 2018, says a report by Moody's.
Quoting the American energy information administration projections, the report said the demand for petroleum products in the Asia Pacific will rise a modest 2 per cent or 0.7 million barrels per day in to 34.6 million bpd in 2018. "Given the oil sector's reliance on
China and increasingly India, we believe demand would face considerable risks if economic growth weakens materially below our expectations.
However, India will surpass China as the fastest growing product market in Asia with petroleum consumption growing 6 per cent in 2018," Moody's said in a report Tuesday. It also says China and India growth will ensure that Asian refining margins will remain firm, thereby supporting the earnings growth. Since October 2014m Moody's has been having stable outlook for the sector. On China, the report says, "as Chinese economic activity dials back, we expect its
refined product demand growth will moderate to 2.53 per cent in 2017-18 which is nearly half of higher CAGR of 5 per cent in 201216. Still in absolute terms, China will still account for 48 per cent of Asian R&M demand growth in 2018. "Specifically, we expect the average Asian refining margins to be largely in line with the average of $6.2 a barrel for the last three years, but better than $5.1 per barrel in 2016," says the report. "The recent forced closure of about a quarter of US refining capacity has created an under supply situation, causing fuel prices, including gasoline, diesel and jet fuel, to surge. Nonetheless, we expect the recent spike in crack spreads," the report adds.