Global Demand | Russell T. Rudy Energy LLC
“Rigzone” recently published an article by energy analyst, John Kemp, in which he offered his forecast for global oil demand in 2016. Kemp breaks demand down into domestic U. S. and foreign components. He further separates domestic demand into the consumer and commercial sectors.
U. S. consumers are buying new vehicles at record levels and many of them are relatively low mileage SUV’s. Traffic on our highways is at record levels and growing at the fastest rate in almost two decades.
However, the volume of freight being transported by road, rail, air, barge and pipeline is flat to slightly down. In fact, the volume of freight hauled last November was down 1.4% from the same month in 2014. Rail freight was down and trucking volume was essentially flat last year. Sales of heavy duty trucks last year were also down from 2014 levels.
This trend of strong consumer demand and weakening commercial demand is consistent with fuel sales. According to the U. S. Energy Information Administration, gasoline sales were up 2.7% in 2015, but low-sulfur distillate fuels (such as diesel), were flat when compared to 2014. Unfortunately, preliminary indications are that gasoline demand might be peaking, and diesel demand appears to remain subdued.
According to the International Energy Agency (IEA,) the U. S. accounted for almost one sixth of the 1.7 million barrels of oil per day (bopd) global increase in demand last year. The balance came from China (600,000 bopd), Europe, and India (220,000 bopd each).
The IEA predicts oil demand will increase by 1.2 million bopd in 2016, a clear decrease from last year’s growth. U. S. demand growth is projected at just 110,000 bopd, but emerging markets, basically China and India, will account for most of the increase.
There are cross currents driving Kemp’s 2016 demand forecast. Urbanization and development will tend to increase demand, but lower commodity prices and diminishing global trade will decrease it. However, the author concludes that one possible upside is a colder winter as the El Nino effect fades.
To read the article in its entirety, please go to http://www.rigzone.com/news/article.asp?hpf=1&a_id=142850&utm
