Why Oil Producers Will Be Over a Barrel for a Long Time Yet - Real Time Economics - WSJ
Crude consumption, meanwhile, isn’t seen growing by large enough levels to justify a major increase in prices. To achieve a balance in the supply-demand ratio, demand would have to grow by 2.5 million barrels a day this year and two million in 2017, Mr. Maugeri said. That’s compared with an average annual growth rate of less than 900,000 barrels a day in the last five years and 1.7 million last year.
After many past boom-bust cycles, demand recovered, but the new growth rate was much lower as efficiency gains enforced in the high-price years bled into the subsequent downturns, he said.
In the wake of the 1980s plunge, oil prices stagnated for nearly two decades.
“But unless demand growth actually explodes—which seems unlikely—the fundamentals remain the same,” Mr. Maugeri said. “In spite of some erosion of production here and there, global oil output, production capacity, and inventories will remain too high versus the level of consumption growth.”