Wednesday, December 8, 2010

This week's TWIP and record world demand for oil

Te EIA released their “This Week in Petroleum” today, with an article on American demand over the past year plotted by month. I had not seen the data presented that way before, and since you may not have, either, here it is:

Change in overall demand in the USA (EIA )

It is spread over two years so that you can see that demand bottomed out in May 2009, and has been rising ever since. As they point out, a growth of almost 1 mbd over last year is a very significant increase in demand, which just about offsets the similar sized drop in demand back a couple of years ago as the crisis began to develop.

If one notes that the plot ends in September, and then goes to the refinery input plot for this past week, that too is kicking up significantly, though at only about half the earlier gain y-o-y.

UPDATE: Because of these evidences of continued rising demand, the IEA has just raised its forecast of demand for next year by another 260,000 bd to 88.8 mbd.

Though in the period between these two points the input reverted to close to being the same as last year.

Gasoline demand does not show as high an increase, with most of the increase in production going into distillates.

That steady increase is a little odd, except that is being used to keep stocks up, given that demand has suddenly dropped off:

(The above figures are from today’s TWIP

At the same time ethanol production has steaily continued to climb to the point where it has now set a new record at 0.939 mbd.

Elsewhere in the world Wood Mackenzie is noting that we appeared to have returned to consumption levels from before the recession. In fact a new record has been reached:
Worldwide oil demand for this year’s third quarter will set a record at 88.3 million b/d, said Wood Mackenzie Ltd., Edinburgh, in its latest analysis. 

According to the report, provisional data shows that global oil demand for the recent quarter will almost certainly exceed the previous highest quarter—the fourth quarter of 2007—when demand averaged 88 million b/d.

Just 3 years from the onset of the great recession, global oil demand has recovered to the pre-recession peak seen in 2007, the report said.
The IEA is predicting that this new level will be close to the average demand for the whole of 2011 but it may be that those predictions are already behind the times.

Assuming that this is the case, then the talk of seeing crude over $100/bbl in the near future is likely to become more true than less. Not that this will cause much concern among the OPEC ministers soon to meet in Ecuador, and certainly it is not going to be a concern if, as Lybia’s minister predicts, oil reaches the $100 figure. Should that occur it might be that quotas get loosened a little, but that is unlikely to occur before the next meeting next June. Which might suggest that the projection of $100 oil may be exceeded quite a bit sooner than most people think. There is, after all, only so much oil still stored around the world in tankers.