Global oil demand has already started to show signs of weakening this year in response to higher oil prices, following another year of robust demand growth above the 10-year average, BP said Wednesday.
- Oil demand grew 1.7 million b/d in 2017
- Proven oil reserves slipped in 2016
- ‘Worrying’ power sector fuel mix
Global oil demand grew 1.7 million b/d last year, up 1.8% from 2016, keeping demand over the last five years at its highest since the peak of the last commodities “super-cycle” of 2006-7, BP said in it’s latest annual Statistical Review. But with Brent trading around $76/b, crude oil prices have risen by nearly 75% since mid-2017, curbing demand for road fuels despite an underlying robust global economy. “Already this year data you can see the price effect is waning, with gasoline demand growth slowed and diesel demand, which is more aligned with industrial activity, picking up,” BP’s chief economist Spencer Dale told reporter while presenting the review.
Oil demand in 2017 continued to be driven by oil consumers benefitting from the “windfall” of low prices, with both Europe and the US showing demand growth of 300,000 b/d and 200,000 b/d respectively, Dale said. The International Energy Agency last month trimmed its 2018 oil demand growth forecast by 100,000 b/d to 1.4 million b/d, citing an expected slowdown in the global economy due to higher oil prices which hit $80/b last month. “If we saw oil prices stay at these types of levels, I think that would eat into oil demand,” Dale said. “One of the lessons we’ve learned over the last few years is that oil demand does respond to pricing laws.”