The top forecasters for the oil market have repeatedly downgraded their estimates for demand. Absent a turnaround in global growth, the pitfalls for the oil market may only grow worse.
Although supply-side dynamics have hogged the spotlight recently, world oil demand this year is expected to average over 100 Mbd—a symbolic benchmark that is more than 13 Mbd higher than it was a decade earlier.
Jet fuel demand growth appears guaranteed in coming decades with increased aviation travel and limited substitutes in this area.
Shale has upended global energy markets but two questions remain unanswered: Can it be called upon to meet demand growth, and will it ever be profitable?
In the shale patch, rig productivity is falling, companies are no longer making headway on drilling times, and cash flow continues to disappoint investors.
WoodMac sees Permian production peaking at 3.5 million barrels per day in 2021, but that forecast stands in sharp contrast to other estimates pointing to robust growth for the foreseeable future.
Although oil would surpass $200 per barrel under its high-price scenario, the EIA sees little effect in curbing demand growth.
When considering autonomy in buses and both light and freight trucks, the EIA sees lower demand compared to its base case in all scenarios.
The market’s initial reaction on Monday and its losses of about $7 since the beginning of March indicate that OPEC members can’t use verbal intervention to lift prices as easily as they did last year.
The reasons for the positive demand revisions come from every region of the global oil market, with stronger economic activity the main reason for the more optimistic outlook.