Global oil demand to outgrow decline

Sam Fletcher
OGJ Senior Writer

Global oil demand will grow more this year than it declined in 2009 and will surpass the 2007 record high “at least 2 years earlier than consensus projections” a year ago, said Paul Horsnell, managing director and head of commodities research at Barclays Capital.

The firm expects the first annual demand increase since 2005 among members of the Organization for Economic Cooperation and Development this year. “The latest Joint Oil Data Initiative (JODI) release shows a better profile for OECD demand, recording the first 2 successive months of year-over-year OECD demand growth since January 2006,” Horsnell said.

“Oil demand surprised to the upside in the second half of 2009, and in 2010 has maintained robust growth from that higher-than-expected base level,” Horsnell reported. “What might have looked like a long haul back has instead been much more of a V-shaped recovery. A year ago, the International Energy Agency was projecting that global oil demand would average 83.4 million b/d in the second half of 2009, while they now put the actual second half level at 85.4 million b/d.”

He said the 2010 demand level is 86.4 million b/d in the most recent Medium-Term Oil Market Outlook, compared with the 84.3 million b/d projection a year ago. That additional “wedge of demand” relative to the expectations of a year ago translated to an increase in the expected call on the Organization of Petroleum Exporting Countries' crude in 2010 of about 1.1 million b/d, “once the relative outperformance of non-OPEC supply over the period is accounted for.”

That additional demand “proved critical in keeping OPEC on an even keel in terms of market management,” said Horsnell. “Indeed, the level of OPEC supply has been more or less flatlining since last August. OPEC output was 100,000 b/d lower last May compared with the August 2009 level according to the US Energy Information Administration and 200,000 b/d higher according to the IEA. In all, pretty much flat and totally under control for 9 months would appear to be the best description of OPEC output.”

Year-over-year demand patterns for Asia-Pacific and North American members of OECD continue to improve sequentially. “The laggard is of course Europe, which continues to follow a divergent demand pattern to the rest of the OECD. When the rest of the OECD was very weak in the first half of 2009, European oil demand was relatively robust, but when demand in the rest of the OECD recovered, the European readings weakened,” Horsnell said. “The year-over-year fall in European oil demand in April is put at 704,000 b/d, leaving the overall rise in OECD demand at 193,000 b/d. That is the second straight month of year-over year demand growth in the OECD, and the last time that happened was January 2006.”

Macondo fallout
Political fallout from the Macondo spill, meanwhile, is escalating, Horsnell noted. The industry’s one apparent victory, a federal judge’s order to rescind the Obama administration’s ban on deepwater drilling, means little “given its likely reimposition and, more importantly, the time it will take companies to meet a complex set of new regulatory requirements,” he said.

New requirements and procedures under the former Minerals Management Service “are complex and likely to take months to process,” said Horsnell. The renamed Bureau of Ocean Energy Management, Regulation, and Enforcement “wishes to be known by the abbreviation BOE, presumably in the hope that it will not be confused with either the Bank of England or the normal abbreviation for barrels of oil equivalent,” he observed.

Horsnell said, “The new BOE regulations and data requirements are complex enough to suggest that even in the absence of a moratorium, there would not be much, if any, further deepwater US gulf drilling this year. Even allowing for no additional moratorium, and assuming that a company can meet the BOE regulations to the full satisfaction of the BOE and get all its backers, insurers, and contractors in agreement and in place swiftly, we still would not expect drilling to resume."

He said, “Some company would have to deliberately step out in front of a government that did not want it to drill, with all that could ultimately entail, knowing that even the slightest glitch in any of their operations would be magnified in a potentially disastrous fashion. It does not sound a particularly likely scenario, in our view, even if the BOE regulations were not the real binding constraint on the resumption of operations.”

(Online June 28, 2010; author’s e-mail:

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...

USGS: Water usage for fracturing varies widely across shale plays

07/01/2015 The volume of water required to hydraulically fracture wells varies widely across the country, according to the first national analysis and map of ...

Case for Keystone XL has grown stronger, TransCanada tells Kerry

06/30/2015 Canada is taking strong steps toward combating climate change, and the proposed Keystone XL pipeline crude oil pipeline remains in the US national ...

Court rejects BP, Anadarko Macondo appeals

06/30/2015 BP PLC and Anadarko Petroleum Corp. have lost separate appeals to the US Supreme Court to overturn a lower-court decision expanding their financial...

Senate Democrats outline broad energy goals to nation’s governors

06/30/2015 Forty-five US Senate Democrats outlined broad energy policy goals including more clean energy technology investments, infrastructure improvement, a...

Group suggests principles for Alberta royalty review

06/29/2015 The Canadian Association of Petroleum Producers (CAPP) has suggested that four principles guide Alberta in an oil and gas royalty review planned by...
White Papers

Definitive Guide to Cybersecurity for the Oil & Gas Industry

In the Oil and Gas industry, there is no single adversary and no single threat to the information tech...

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by
Available Webcasts

Better Data, Better Analytics, Better Decisions

When Tue, Oct 27, 2015

The Oil & Gas industry has large amounts of data stored in multiple systems which are purpose built for certain tasks. However, good decisions require insights based upon the data in all of these systems. These systems in turn do not talk to each other. So the process of analyzing data, gaining insights, and making decisions is a slow one and often a flawed one. Good decisions require accurate analytics and accurate analytics require superior/sustainable data quality and governance. This webinar focuses on:

  • The importance of data quality and governance
  • How technological advances are making data quality and governance sustainable in order to get the accurate analytics to make solid decisions.

Please join us for this webcast sponsored by Seven Lakes Technologies and Noah Consulting.


Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!


Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected