(Wall Street Journal) After hitting a five-year high in 2015, the global growth in demand for oil is expected to fall by about a third next year, adding further strain to an already oversupplied crude market.
A 40% decline in the price of oil since last year has boosted demand, encouraging motorists, consumers and companies to top up. But the economic slowdown in China and elsewhere in Asia could sap that demand, according to analysts and big energy watchdogs.
Just how far that growth in demand will fall is unclear.
“We’re seeing pretty solid demand growth this year, but the big question is what will happen next year,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, which oversees $126 billion.
Sergey Frank, chief executive of Russia’s largest shipping company, Sovcomflot, said its net profit has more than tripled this year as cheaper crude keeps fuel costs low and demand high for the oil products that he ships around the world.
Mr. Frank is preparing for the worst as he plans his shipping routes for next year.
“Today there is favorable wind, but tomorrow there could be headwind on the market,” he said.
The International Energy Agency, an energy watchdog, forecasts global oil demand growth falling from 1.8 million barrels a day this year to 1.2 million next year.
The Organization of the Petroleum Exporting Countries, the 12-nation oil cartel, expects demand growth to fall to 1.25 million barrels a day, and some analysts see demand dropping even lower.