Global oil demand appears to be showing signs of weakening as oil demand forecast this year dropped to 1.4 million barrels per day in response to higher oil prices, BP said on Wednesday.
In its latest statistical review, it noted that global oil demand grew 1.7 million barrels per day last year, up 1.8 percent from 2016, keeping demand over the last five years, but with brent trading around $76 per barrel, crude oil prices have risen by nearly 75 percent since mid-2017, and this has led to demand for fuels dropping despite an underlying robust global economy.
Spencer Dale, BP’s chief economist said that “this year’s data shows that the price effect is waning, with petrol demand growth slowed and diesel demand, which is more aligned with industrial activity, picking up.”
The International Energy Agency (IEA) had also cut its 2018 oil demand growth forecast by 100,000 barrels per day to 1.4 million b/d, citing an expected slowdown in the global economy due to higher oil prices which hit $80 per barrel last month.
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“If we saw oil prices stay at these types of levels, I think that would eat into oil demand,” Dale said. “One of the lessons we’ve learned over the last few years is that oil demand does respond to pricing laws.”
On supply, BP said global oil production rose 600,000 barrels per day last year, below average for the second consecutive year as OPEC-led output cuts helped tighten the oil market.