* German demand rises as economy gathers momentum
* France, Italy and Spain all see sharp demand declines
* Consumption expected to contract in 2013 by 1.7
By Ron Bousso
LONDON, July 26 European oil demand fell further
in the first half of 2013 despite glimmers of economic recovery,
as modest German growth could not offset steep consumption
declines in France, Italy and Spain, according to data compiled
Unusually cold weather in April and May in large swathes of
Europe boosted demand for heating fuels, but not enough to
change what is seen as a grim reflection of the region's
economic troubles, traders and analysts said.
"With Europe there are no surprises, we haven't seen any
improvement in the first half of the year, we are a long way
from recovery," said Andrey Kryuchenkov, analyst at VTB Capital.
"Nothing much is happening in terms of growth. Industrial
growth has been painfully slow."
The euro zone economy has in recent months shown cautious
signs it was crawling out of its record-long recession, but new
strains in the region's debt crisis may put all that at
The International Monetary Fund predicted the euro area
would remain in recession this year, with the currency bloc's
economy contracting 0.6 percent, before recovering slightly to
expand just under 1 percent next year.
The International Energy Agency forecast Europe's annual
demand to contract by 1.7 percent to 13.5 million barrels per
day (bpd) in 2013, after slumping 3.9 percent in 2012.
In Italy, which has seen consumer morale rise recently as it
struggles with its longest post-war recession, demand for
refined oil products in the first six months of 2013 decreased
by 8 percent, industry group Unione Petrolifera (UP) said.
Europe's second largest economy, France saw diesel and
gasoline consumption slip 1.8 percent from 2012, according to
the industry group Union Francaise des Industries Petrolieres
Spain's January-May total oil consumption was down 5.9
percent from a year earlier, according to government data.
Germany, Europe's largest economy that appears to be gaining
growth momentum, was the only major euro zone economy to see
German oil product sales rose 2.9 percent between January
and May from a year earlier to 45 million tonnes, according to
state economic and trade statistics office BAFA.
"Unseasonably cold late winter weather was likely a major
driver behind the rebound, though there are early signs that the
beleaguered German economy may be on the mend," the IEA said in
its July monthly report.
Total oil and oil product demand in Britain nevertheless
drifted 0.1 percent lower between January and May compared with
a year earlier, according to the Department of Energy and
At the same time as European motor fuel consumption
continued its recent years' decline, car sales slumped to their
lowest six-months total in 20 years in the first half of 2013.
A 6.3 percent drop in June vehicle sales suggested no let up
for an industry battered by over capacity and weak
The transport sector accounts for 55 percent of Europe's oil
Looking forward, European oil product demand is expected to
grow by a meagre 0.1 percent per year by 2015, according to the
UK Petroleum Industry Association (UKPIA).
"Changes in demand are likely to be relatively modest over
the next few years, but over the long term, growth rates are
expected to pick up slightly, with the highest rates expected to
be in Southern Europe as this region has the greatest number of
growing economies," UKPIA said in a recent report.