ELECTRIC VEHICLES GROWTH IS DECELERATING GLOBAL GASOLINE DEMAND

Mon 06 May 2024:

Analysts anticipate a significant slowdown in global petrol demand trajectory for 2024, with growth potentially halving compared to previous years.

This shift, as outlined by Reuters, is mainly attributed to the rising popularity of electric vehicles (EVs) in major markets such as China and the US, alongside a return to pre-pandemic consumption levels following last year’s rebound.

Consultancy firm Wood Mackenzie predicts the lowest growth since 2020, estimating demand to rise by 340,000 barrels per day (bpd) to reach 26.5 million bpd this year, down from the 700,000-bpd growth seen in 2023.

This trend holds significance as China nears peak transport fuel demand, while the US has already surpassed it.

Sushant Gupta, an analyst at Wood Mackenzie, highlighted the influence of electric vehicles on demand dynamics, especially in the US and China.

“The adoption of electric vehicles has been increasing in the US and China,” he stated, pointing out the impact on gasoline demand, with Chinese growth expected to be a mere 10,000 bpd this year due to higher EV adoption.

Simultaneously, consultancy Rystad Energy forecasts global gasoline demand to reach around 26 million bpd in 2024, marking a slight increase of approximately 300,000 bpd from the previous year.

This growth, fueled by the post-pandemic consumption surge, indicates a shifting landscape where EVs are gaining prominence.

China, once a major driver of global gasoline demand, is witnessing a transition towards EVs.

The International Energy Agency (IEA) predicts that China will account for over half of all EV sales in 2024.

Despite this transition, gasoline consumption in China is expected to see some growth.

Forecasts by the research arms of China National Petroleum Corp (CNPC) and Sinopec suggest an estimated increase in gasoline demand, with CNPC projecting a 1.3% rise to 165.1 million metric tons (3.8 million bpd) and Sinopec expecting a 1.7% increase to 182 million tons.

This growth occurs amid falling prices, further stimulating demand.

Besides China and the US, other regions like India and Indonesia are witnessing robust gasoline demand as car sales surge amidst low EV penetration.

India, in particular, is poised to achieve a new record in petrol consumption, with government estimates projecting a rise to 39.2 million tons (908,000 bpd) in the fiscal year ending March 2025, up 5% from the previous fiscal year.

However, in regions like the US, where gasoline consumption is stabilizing, refining margins are expected to face sustained pressure post the peak summer driving season.

The outlook for refining margins across various regions remains mixed, with Europe expected to encounter both growth and challenges.

FGE predicts a 2.3% growth in European gasoline demand in 2024, in line with recent trends.

However, rising competition from Nigeria’s Dangote refinery, coupled with stagnant demand in Europe, is likely to weigh on refining margins.

Wood Mackenzie warns that European refineries could encounter heightened pressure due to competition from new players and geopolitical factors impacting market dynamics.

Despite the challenges posed by shifting demand patterns and geopolitical uncertainties, gasoline margins have shown resilience in certain markets.

Data from LSEG indicates an 85% increase in gasoline margins across the US and Asia, driven by expectations of robust summer demand.

Nevertheless, the European market faces its own challenges, with margins under pressure from factors including new refinery competition and geopolitical tensions.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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