- Posted August 12, 2013 by
US oil demand rises at fastest pace
Oil demand in the US is rising at its fastest pace in more than two years, driven by buyers of industrial fuels such as gas oil and liquefied petroleum gas.
Data from the International Energy Agency show that demand for oil in the US increased in four of the first six months of the year – the strongest run since early 2011. As a result, the energy watchdog has upgraded its forecast for US demand this year from zero growth to 0.3 per cent – indicating the first year of growth since 2010.
“Signs of recovery in the US economy have been associated with rising oil consumption in recent months,” the IEA said in its monthly oil market report. The IEA also expressed surprise that the IMF reduced its forecast for 2014 US GDP growth last month, given that “the US [oil] demand outlook for 2013 looks more upbeat”.
Demand for oil in the US fell in six of the past seven years amid moribund economic growth and a greater emphasis on fuel efficiency. But, this year, consumption of industrial fuels – such as diesel, for trucks and trains, as well as propane, as a feedstock for petrochemicals plants – has rebounded strongly.
More recently, US government figures showed strong growth in gasoline demand in July, suggesting American consumers are also driving more.
“The data have been strong enough for a sustained period to suggest a turning point has come and gone in the US, and demand is now improving on the back of industry,” said Amrita Sen, an analyst at Energy Aspects, a consultancy.
The US figures follow a return to growth in oil demand in Europe, in spite of a growing consensus that industrialised economies will gradually reduce consumption, leaving demand dependent on emerging markets.
These better than expected reports from mature economies have helped oil defy a summer sell-off in the wider commodities market, over fears of slowing growth in China. Brent crude oil, the global benchmark, has climbed from below $100 a barrel in April to around $107 a barrel today.
However, the IEA also highlighted supply outages in the Opec oil producing countries as another reason for price strength.
In Libya, production fell to 1m b/d in July – a sharp drop from June, when production was already at its lowest since the country’s civil war in 2011.
In Iraq, production dipped below 3m b/d for the first time in six months.