Peak Oil Demand Is Nowhere in Sight

Hello and welcome to Elements, our daily energy and commodities newsletter. Today, Bloomberg Opinion’s Javier Blas examines the probability of peak oil demand being reached anytime soon. His conclusion: Don’t hold your breath. To learn more about Europe importing diesel cargoes at pace, read this. To find out who made the Bloomberg 50 list, click here. If you haven’t yet signed up to get Elements directly into your inbox, you can do that here.

In energy and commodities, there’s stuff that’s always at least 10 years away. Fusion energy is one; asteroid mining is another. And so is peak oil demand. The problem is that a decade goes by, the prediction doesn’t come true, the goalposts are moved further out, and everyone forgets about the old predictions.

Don’t get me wrong: one day, they will come true, and I’ll have to eat my words. It will be a great celebration. But for now, in the realm of the present, things aren’t going as many hoped.

Let’s focus on oil consumption peaking, perhaps the most likely of all the “it’s 10 years away” stuff to ultimately happen.

For now, if a peak in oil demand is near, it’s not showing in any contemporaneous data or reliable short- and medium-term forecasts. Only long-term models — rather than forecasts — point to a peak. Everything else shows steady-as-it-goes consumption.

Take the International Energy Agency’s short-term oil market report. Earlier today, it said demand will climb to almost 104 million barrels a day by the end of 2023, well above the previous peak of 102 million barrels set in mid-2019. That’s even though commuting — a huge source of gasoline and diesel demand in both the US and Europe — has changed forever, with work-from-home set to stay, at least partially, in many white-collar professions.

The IEA forecasts global oil demand growing next year by a hefty 1.7 million barrels a day — despite exorbitant prices, rising interest rates, sharply slowing economic growth and the lingering impact of Covid-19 in Asia.