Crude Realities: Demand

In Oil – Demand Growth Connundrum I’ve attempted to outline a case that a) demand for crude from the two largest consumers, China and the US, is higher than forecast for this year, b) that demand growth from China will continue to be substantial, c) that the current supply/demand balance is precarious and d) crude prices are likely to rise further, even on the back of OPEC‘s recent announcement to lift quotas.

It may be that market participants blink first and back off, but it does seem as if a show down with OPEC is in the making here.

Ironically, $70, $80 oil might cause energy stocks to fall, as fears of an energy crisis and global recession are likely to rapidly mount. There hasn’t been much evidence to support such a thesis – so far, consumers and businesses have been adapting remarkably well to higher crude prices.