“We have never consumed more oil in history than we have today,” Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners told Bloomberg in an interview, adding that the trend is obvious despite the argument that recession has hit demand for oil.
“We've been fighting this narrative about weak demand due to a recession, which we've been hearing about for a year,” Nuttall said, adding that OPEC+’s production restrictions have contributed to a growing imbalance between supply and demand.
Global oil inventories are at the lowest since 2017 while demand for oil is at a record high. Even so, for most of this year, oil prices have been depressed “because of recessionary fears”, the hedge fund manager said.
This is likely to change in the coming months as limited supply and robust demand combine to push prices even higher.
Indeed, Nuttall, who has been consistently bullish on oil, is not alone in his demand observation. The International Energy Agency too has estimated global oil demand at a record high this year, with the growth rate for the year seen at 2.2 million barrels daily.
This, the IEA said in its August Oil Market Report, will push the total to a record high of 102.2 million barrels daily. It won’t end there, either, as the IEA forecast a further demand expansion of 1 million bpd next year.
That would be a much slower growth rate than this year’s, which the IEA has attributed to a combination of factors, including “the post-pandemic rebound running out of steam, and as lacklustre economic conditions, tighter efficiency standards and new electric vehicles weigh on use.”
The IEA will release the next issue of its Oil Market Report on Wednesday. Meanwhile, Brent topped $91 per barrel earlier today ahead of the U.S. oil inventory report, which analysts expect will reveal another draw, and consumer price data, due out on Wednesday.