Oil Demand Forecasting for China: A Fresh Evidence from Structural Time Series Analysis

Abstract :

The prime objective of this study is to investigate the linkages between oil price, oil reserve, economic growth and oil consumption in order to forecast future oil demand in China. A Structural time series technique is used to expose the underline energy demand trend (UEDT) for total oil consumption and transport oil consumption over the period of 1980-2015.In both models, the elasticity of GDP and oil reserve remain positive and significant. While the elasticity of oil price shows the negative and significant relationship with oil demand. Moreover, the results suggest that GDP, oil price, oil reserve and UEDT are found to be important drivers for oil demand. Further, UEDT has found to be an increasing trendin total oil consumption as well as for transport oil consumption. It is also predicted that total oil demand will be 9.9 thousand barrels per day by 2025, while, transport, oil demand will be 9.0 thousand barrels per day by 2020 in the case of China.