More on Global Oil Demand Going ForwardI found these statistics interesting, which prompts me to take a look back in the rear view mirror, and question if there will be a rapid demise of oil due to changes in types of transportation fuel.
Over the last 10 years, we have spent 3.8 Trillion USD on renewables globally.
Fossil fuels went from 82% to 81% of the global energy share.
However...
Over the same 10 year period, global oil consumption went from 89.8 mm bpd in 2012, to 99.4 mm bpd in 2022. This includes the major hit due to the pandemic.
What is happening now?
In December 2022 while China was kept under lockdown, and during low seasonal demand, and many people working from home, we hit a new record for global oil consumption.
I dig and I look, but still see no change in current data regarding any reduction in demand to lead me to believe this historical trend of increasing absolute oil demand will not continue, although it's percentage of total energy demand may decrease, even accounting for realistic practical rates of adoption of renewables in a partial energy transition.
As we consume oil, we deplete our current reserves all across the planet, we are not coming forward fast enough with capital investment to replace these reserves at a rate to meet current global demand, let alone meet for future demand growth.
China inventories are now down by 40mm bbls while we focus on the data that the west is higher by about the same amount.
On the supply side, rig counts are still dropping, as are Frac Spreads, and DUCs. Generally there is a 4-5 month lag in rig counts after oil price changes, setting us up for a taller spike if it turns.
US Shale earnings have been disappointing, due to declining production, well productivity, depletion, and higher costs. Wells are getting more gassy, producing less oil and more gas requiring more flaring as there is not enough pipelines to take the new gas.
Iraq's largest West Qurna field is going to be down from mid Feb 20 till early March, .4mm bpd.
Equador oil production is down for a few weeks taking off .5mm bpd., bridge and pipeline collapse.
WCS diffs are tightening, now just over $16.
Russian crude production will be down about .5mm bpd, and going forward without western specialist expertise and equipment, will have trouble maintaining production going forward.
US SPR has been pillaged.
So what would the oil price be like in a few years if demand exceeds supply?
Where is geopolitical risk priced in to oil now?
With Iran nearing critical enrichment completion levels, just how close to ME energy infrastructure and oil tankers will the next war be waged?
For me, I am very comfortable at this time in the cycle while NA inventories have been high, and oil and product prices are still low, to get into and hold a core position in Canadian heavy producers.