Energy Sector Update for 11/20/2015: SU.TO, ECA.TO, CNQ.TO, COS.TO, CVE.TO, CPG.TO, HSE.TO, IMO.TO, PPL.TO, TRP.TO, TCK-B.TO
Credit Suisse believes that oil demand in China will continue to grow at a healthy clip of +4% yoy, largely because car sales are booming. This view contrasts sharply with consensus projections of far less oil demand growth that are based on the GDP and IP inputs.
The brokerage observes that gasoline demand is increasingly important and is driving much of China's outperformance (in oil demand-growth terms) this year.
"It seems perfectly logical that as China's car fleet grows, gasoline demand grows apace."
Credit Suisse' new models project gasoline demand growth between 280,000 barrels per day (~10%, yoy) and 360 kb/d next year; and something similar in 2017, even if by then car sales-growth slows to low single digits. "Our forecast is two to three times greater than the gasoline component of the International Energy Agency's oil demand forecast for China, aka consensus."
While China's economic growth is increasingly involving its consumers, which is not a new observation;gasoline demand growth of this magnitude is new. "China's thirst will likely compound cyclically growing gasoline use in North America as well as structurally rising consumption in other EM economies next year - adding to our view that oil markets in 2016 will look quite different."
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