World Demand for Oil to Fall, but Does It Even Matter for Oil Price?

Economica  ( Original )
APR 13, 2018

It is part of an interesting larger thought exercise to examine Chris Hamilton’s proper emphasis on the fact that the clear, coming decrease in global demand for oil can’t be at all correlated to any price prediction for oil.

Much as speculative and hedge traders freely and frequently manipulate the futures markets involving all manner of commodities (having no interest in or idea of the supply and demand of the underlying asset they’re trading), oil is like any other asset in the central bank world: just another proxy for political and economic gamesmanship.

Organic demand or population growth alone (absent surging debt) among the consumer base that consumes in excess of 90% of global oil, is collapsing.

However, I make no predictions regarding the oil price outlook as there are far too many other factors regarding; supply, currencies, geo-politics, cap-ex for exploration, depletion rates of existing fields, and far more.

My sole focus and point is that growth in demand is fast waning but that price is an amalgam of demand with many other factors that may result in a rising price despite declining and soon to be falling organic demand.

However, from 2020 through 2025, the US Energy Information Administration (EIA) forecasts oil consumption will continue trend growth while population growth among the consumer base has decelerated 90% compared to peak growth (and turns to outright declines within the decade), global interest rates simply can't get much cheaper, debt levels continue climbing beyond sustainable levels (resulting in large overcapacity absent further interest rate cuts and utilization of greater debt), and innovation/conservation/alternative sources of energy marginally reducing oil consumption.

Simply put, even with continued ludicrous levels of debt creation and misallocation taking place, I'll take the under against the EIA's forecast for continued trend growth of global oil consumption...way under.  But again, this does not necessarily mean the price of oil in dollars or Yuan or Euros will be declining as there are far too many other factors which are simultaneously affecting supply or the value of "money" and what backs them

ORIGINAL SOURCE: Demand Growth for Oil Consumption Looks Bleak...But Price May Be Another Matter by Chris Hamilton at Economica on 4/11/18