18 May 2012 22:25 [Source: ICIS news]
CHICAGO (ICIS)--The growth of the middle class over the next 10 years in the eastern part of the world will cause oil consumption, and accordingly, distillate demand to grow, a US-based economist said on Friday.
“It has to continue to grow if the middle class grows,” said Roberto Sieber, chief economist with Hess Energy Trading while speaking at the International Air Transport Association’s (IATA) Aviation Fuel Forum.
According to Sieber, jet fuel demand is expected to move 40,000 bbl/day higher globally in 2012. In comparison, the year-to-date average of monthly US distillate demand, which includes jet fuel demand, is 3.9m bbl/day, according to American Petroleum Institute data.
Sieber compared growth of demand between all countries east and west of the Suez Canal. He said most of the gains will come in the countries east of the Suez Canal, mainly in Asia.
“Some countries will decline a little, some will grow a little. They will balance each other out,” he said.
According to Sieber, the growth in distillates has to come from increasing refining capacity because there are no sufficient inventories in the east. Sieber said Asian refinery runs will be up by 700,000-800,000 bbl/day this year, and in the west, particularly in Europe, refinery runs will be reduced.
“Once we start to draw on the inventory, the crude structure will start to firm,” he said. Sieber expects typical seasonal inventory draws to begin in June-July.
Furthermore, he said Asia will produce more jet fuel than it will consume, which will lead to increased exports to eastern Africa and Latin America, where there is more jet fuel demand.
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