While oil prices have eased back today based on presumably US-China trade concerns hurting demand, it shouldn’t be forgotten that just last week the Energy Information Administration’s (EIA) confirmed its view that oil demand will return to growth in the fourth quarter.
Such growth will be driven by China and other non-OECD economies, yet by 2010, even demand from the US and other OECD nations is expected to return to growth as well. By then, we should be back at 2006 levels of global demand.
EIA: As we move into 2010, EIA expects that demand growth will continue, with global oil consumption projected to increase by 0.9 million bbl/d over 2009 levels. This growth will be led not only by the non-OECD countries, where nearly every region is expected to show growth in oil consumption, but also by the United States, where oil consumption has been declining since mid-2007. But how quickly and how significantly global oil demand rebounds will depend in large part on the pace of the global economic recovery.
Still, barring a surprisingly strong recovery, the potential for a new superspike in oil appears a long ways off. This is because we are unlikely to retake 2007’s peak level of demand any time soon, especially since both OPEC and non-OPEC production are expected to rise. We’re likely to see good news on the growth front going forward, but it won’t necessarily mean we’re back to the punters’ races for oil.