Friday, December 11, 2009

When Will Real Oil Demand Growth Appear?

How do you know when the economic recovery really begins? It is when real oil demand growth appears? Not just artificial demand growth being propped up with smoke and mirrors but demand growth that comes with solid economic activity and global growth. Growth that hopefully will be ignited by the low prices that will come when we start to remove the life supports to the economic system and global currency exchange rates start to normalize. Oil demand growth will be the thermometer that will take the economy's temperature and tell us that we are indeed getting healthy.

Believe it or not these are some of the same sentiments that are being expressed by the International Energy Agency. Well at least partly. Today the advisor to 24 consuming nations said while increasing it oil consumption forecast globally by 1.5 million barrels per day to 86.3 million barrels that demand from major consumers may herald an economic recovery. Of course while I agree that things are getting better I still wonder whether this oil demand growth is solid enough to grow on its own. Can it continue to grow without the massive stimulus and will it continue when demand goes away.

The IEA says that oil demand will increase a little bit mainly due to demand growth in China. Yet at the same time the growth out of China is as mysterious as the country.....Read the entire article.


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