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The Energy Report: Peak Oil Demand

Just breaking… is discussing pausing their output production hikes from October, saying that we would not ever consume as much oil as we did in the past. As predicted the “Peak Demand” oil theory has been dis-proven again.

The United Arab Emirates oil minister Suhail Al Mazroui said that nobody’s talking about peak oil demand anymore. I wonder why? May be it’s because Saudi Aramco CEO Amin H. Nasser sees global oil demand growth of 1.2 to 1.3 million barrels a day this year. Or maybe it’s because OPEC actually raised its forecast for world energy demand not only in the medium term but also in the long term as global economies expand and population growth boosts requirements for oil and the trillions spent on green energy is not picking up enough of the slack to make those “Peak Oil Demand” predictions of a few years ago.

In fact, OPEC is predicting that in its World Oil Outlook 2050 report released Thursday, that global energy demand will rise 23% to 378 million barrels of oil equivalent per day by 2050. According to OPEC, global oil demand in the medium term is expected to rise by 9 percent, reaching 113.3 million barrels per day in 2030, up from 103.7 million barrels per day in 2024. In the long term, projections indicate an increase of 18.5 percent with demand reaching 123 million barrels per day by 2050.

Haitham Al Ghais, OPEC’s secretary general, stated that factors such as economic growth, population rise, urbanisation, energy-intensive industries like AI, and expanding energy access will drive future demand. By 2050, the global population is projected to hit 9.7 billion, up from 8.2 billion in 2024, with the working-age group increasing by 800 million to reach 6.1 billion.

This development is consistent with The Energy Report’s longstanding position regarding peak oil demand and peak oil production, which was the other peak fallacy in the beginning of this Millennium. Years ago, I often argued against the widespread belief that global oil production had peaked. At conferences, debates about the world running out of oil were intense. Now, however, the conversation has shifted to predicting when oil demand will peak.

I was trying to explain that if oil prices rise enough, people will find new sources of oil, as there are untapped reserves worldwide. I also mentioned, controversially, that oil might not come from dinosaurs—a notion that could upset those attached to that idea. Let’s face it, nobody really knows for sure. But what we do know is that the theories about peak oil production and peak oil demand are about as extinct as the dinosaurs are now.

The prediction that fossil fuels would soon become obsolete has proven inaccurate, as global oil demand continues to grow and break records each year. Earlier fears of reaching “peak oil” have not materialized, and rising prices incentivize the discovery of new oil sources, both domestically and offshore. Technological advancements will help meet demand, provided government regulations do not hinder progress.

Oil itself is driven by market forces and those are market forces here in the US that are challenging because of the success with President Trump’s policy and lowering oil prices. Not only are we seeing rig counts fall here in the United States, but Chevron (NYSE:) reportedly plans a major global reorganization, aiming to cut up to $3 billion in costs and reduce its workforce by 20%.

Although rig counts are currently declining, I anticipate that oil production may increase once inflation decreases and the market adapts to regulatory changes. In the short term, production levels face challenges due to recent rapid price drops.

Additionally, there have been discussions regarding the impact of politically motivated misuse of the Strategic Petroleum Reserve releases and policies implemented by the Biden administration that distorted the market and hurt US energy producers. Now when the Trump Administration tries to replace the SPR barrels that were lost, the damage done by the Biden administration to the salt domes is slowing down that process putting further downward pressure on prices and hurting US producers.

Today oil prices and products are a mixed bag. We saw a big increase in the Energy Information Administration for most of that supply increase was due to a big drop in the US exports which could be weather related. The heating crack spread pulled back a bit and seems to be gaining ground. The tightness and diesel supply is very apparent especially in the light of yesterday’s EIA report .

The EIA reported  US distillate fuel inventories dropped by 0.8 million barrels and were a whopping 23% below average. That was a very concerning level and it’s one of the reasons why the crack spread has been so strong even though it exhibited some weakness yesterday.

EIA said that U.S. commercial crude oil inventories rose by 7.1 million barrels to 426 million, 8% below the five-year seasonal average. And that increase probably is going to go away next week as the export for oil will start to pick back up.

Motor gasoline inventories fell by 2.7 million barrels and are 1% below the five-year average. Both finished gasoline and blending component stocks declined. Distillate fuel inventories dropped by 0.8 million barrels and are a whopping 23% below average.

Propane/propylene inventories increased by 2.7 million barrels and are 12% above average. Overall commercial petroleum inventories grew by 6.4 million barrels last week.

Today, the Energy Information Administration will release its report on . Recently, strong production levels coincided with record-high temperatures, resulting in higher-than-expected inventories. When weather forecasts shifted to more typical or cooler temperatures, prices subsequently declined. Current forecasts indicate the possibility of increased heat, which could potentially impact natural gas prices.

Fox Weather reported that communities across the U.S. are reeling after torrential rain produced catastrophic flooding that sent deadly walls of water rushing downstream, devastating communities in Texas, New Mexico, and North Carolina – all within a week. Prayers for all.

Fox Weather is reporting that, “A hostile atmosphere over the Caribbean Sea has helped lead prominent weather experts at Colorado State University to give a slight downgrade in their hurricane forecasts for the rest of this season. Fox Weather reported that, “Dr. Phil Klotzbach and his team are now predicting 16 total named storms through the end of the year, a small drop from their original forecast of 17, and now just slightly above an average season of just over 14. Of those, eight are forecast to reach hurricane strength, a drop from their original prediction of nine.

So far this season in the Atlantic basin, there have already been three tropical storms, but no hurricanes. “The primary reason for the slight decrease in the outlook is both observed and predicted high levels of Caribbean (wind) shear,” Klotzbach wrote in his team’s July forecast update published Wednesday. Wind shear is the changing of wind speed and direction with height.

Higher levels of wind shear inhibit tropical development. “High levels of Caribbean shear in June/July are typically associated with less active hurricane seasons,” Klotzbach said to Fox Weather.

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