According to Oil Market Intelligence, world crude oil supply rose to a record 90.2 million barrels per day on average in the 12 months ended April 30. The price of a barrel of Brent crude oil has been remarkably flat (with some volatility) around $110 since early 2011. World oil supply has been well balanced with world oil demand at this price.
Let’s review some of the highlights of the latest demand data compiled by OMI through April using 12-month averages to smooth out seasonal volatility:
(1) World. World crude oil demand rose to a record 91.7 million barrels per day last month. However, the growth rate has slowed from a recent high of 1.5% year over year in September 2013 to 1% in April. This suggests the global economy is growing, but at a relatively slow pace.
(2) Emerging countries. Most of the recent slowdown is attributable to emerging economies. The OMI data show that the growth rate among non-OECD countries is down from 3.7% a year ago to 1.9% now. Among the 34 advanced economies of the OECD, oil demand growth is close to zero on a year-over-year basis, but that’s an improvement from negative readings during 2012 and 2013.
(3) China and India. Oil demand rose sharply in China from 2009 through mid-2013. Since then, it’s been flat, around a record 10 million barrels per day, confirming that the country’s economy is in the midst of a significant slowdown. On the other hand, India’s oil demand rose to a record high of 3.8 million barrels per day last month, up 3.8% year over year.
(4) Europe. I have often shown that oil demand is a useful indicator of economic growth. In addition to suggesting a significant slowdown in China, it is confirming that the eurozone’s economic recovery is very weak. Oil demand in Germany has been flat around 2.4 million barrels per day since 2010. Demand in France, Italy, and Spain remains on a downtrend that’s been going on for over five years.
Source: Ed Yardeni — Ed Yardeni is the president and chief investment strategist of Yardeni Research Inc., a provider of independent investment strategy and economics research for institutional investors.