Europe Diesel, Gasoil Growth Seen Flat-Lining

There are indications that diesel and gasoil demand in Europe's five leading countries is flat-lining this year, following a stellar 2015 when lower prices saw middle distillates consumption in the region post the first gains in five years.

BP's annual statistical review released yesterday showed that middle distillates consumption in the European Union -- including jet fuel, gas and diesel oils -- climbed 3.4% in 2015, to 6.7 million b/d.

But first-quarter demand for diesel and gasoil oils in France, Germany, Italy, Spain and the U.K. -- Europe's top five consumers -- declined by 0.1% compared to the first three months of 2015. Demand in the first three months of 2016 was
at 3.88 million b/d Joint Industry Data Initiative (JODI) statistics show. That also compares with a 2.5% rise in 2015 over 2014 levels.

Estimates for second- and third-quarter growth are now seen at a much slower pace. London consultants Energy Aspects forecasts that diesel and gasoil consumption in the top European five countries will be 0.5% higher in 2016, at 3.884 million barrels.

Even so, the EU regained its title from North America as the largest regional user of middle distillates in 2015, according to the BP statistical review, consuming 6.88 million b/d. That accounted for 54% of all oil consumed. That surpassed North America, which recorded 6.78 million b/d, a 0.2% fall on the prior year. Middle distillates comprised 28.7% of North American oil consumption.

BP said in 2015 that OECD countries drove global oil consumption higher by 1.9 million b/d, or 1.9%, nearly double the recent historical average, and above the 1.1 million b/d seen in 2014. EU growth was 1.5%, or 200,000 b/d, higher.

"There are clear signs that energy markets responded to the signal provided by lower prices: demand in some cases was boosted; supplies in the form of current activity or future investment was severely curtailed; the fuel mix adjusted. There is still further to go," BP said.

"In some markets, notably oil, the adjustment process was offset by non-price led developments. But even so, an adjustment process does appear to be underway which bodes well for future market stability."

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