Yves here. As global conflicts seem way too likely to blow big, and US politics look, as Lambert would say, overly dynamic, the global warming train is not slowing down. Matthew Simmons and his peak oil confreres look to have called for a turn way too early. Needless to say, the projected continuing fossil fuel production levels are to the detriment of the environment and in due course, civilization as we know it.
Green energy projects, based on the neoliberal premise that letting people shop “smarter,” perhaps with tax incentives and disincentives and even mandating an end to new internal combustion car production, will curb fossil fuel use. The post explains that that is not expected to happen, at least not on anything resembling the timetable needed to prevent worst outcomes.
Contrast the post below with the recent peak oil consensus, oddly not updated in Wikipedia:
There was [when?] a consensus between industry leaders and analysts that world oil production would peak between 2010 and 2030, with a significant chance that the peak will occur before 2020. Dates after 2030 were considered implausible by some. Determining a more specific range is difficult due to the lack of certainty over the actual size of world oil reserves. Unconventional oil is not currently predicted to meet the expected shortfall even in a best-case scenario. For unconventional oil to fill the gap without “potentially serious impacts on the global economy”, oil production would have to remain stable after its peak, until 2035 at the earliest.
Now admittedly, the post is talking about oil demand, not supply, but there seems to be no concern that the spice will still flow.
By Alex Kimani, a veteran finance writer, investor, engineer and researcher for Safehaven.com. Originally published at OilPrice
- Whereas the short-term oil price outlook appears murky, leading oil agencies remain largely bullish about the long-term outlook.
- Interestingly, over the medium-and long-term, only the IEA sees global oil demand peaking before 2030.
- Standard Chartered has predicted global oil demand will hit 110.2 mb/d in 2030 and increase further to 113.5 mb/d in 2035.
The oil price rally has lately lost some steam, with WTI for May delivery and June Brent futures slipping more than 5% since Friday after the Energy Information Administration (EIA) released bearish weekly data that triggered demand concerns. According to the EIA, crude inventories rose 5.84 mb w/w and oil product inventories rose 6.57 mb; however, the builds relative to the five-year average were modest, at just 0.11mb for crude oil and 1.24mb for products. U.S. commercial inventories now stand 16.47mb below the five-year average, with crude inventories at Cushing 7.35 mb below the five-year average. The EIA also estimates U.S. crude oil output clocked in at 13.1 mb/d for a fifth consecutive week, 0.8 mb/d higher y/y but 0.2 mb/d lower than December 2023 production.
Whereas the short-term oil price outlook appears murky, leading oil agencies remain largely bullish about the long-term outlook. Last week, the International Energy Agency (IEA) published its latest monthly Oil Market Report (OMR), including its first detailed 2025 forecast. The Paris-based energy watchdog predicted that global oil demand in 2025 demand will be 1.147 mb/d higher than 2024 levels, higher than the 1.0 mb/d estimate it had released in June 2023. Other leading agencies have predicted even higher demand growth in 2025: the EIA forecast is 1.351 mb/d, Standard Chartered’s forecast is 1.444 mb/d while the OPEC Secretariat has predicted a 1.847 mb/d increase in demand.
Interestingly, over the medium-and long-term, only the IEA sees global oil demand peaking before 2030, even in its most optimistic forecast (high growth). However, the IEA says an oil demand peak doesn’t necessarily mean a rapid plunge in fossil fuel consumption is imminent, adding that it will probably be followed by “an undulating plateau lasting for many years.”
The EIA is the most bullish on long-term oil demand, and has predicted a demand peak will come in 2050 while the OPEC Secretariat sees it coming five years earlier. Meanwhile, Standard Chartered has predicted global oil demand will hit 110.2 mb/d in 2030 and increase further to 113.5 mb/d in 2035. However, the commodity experts have not projected a demand peak beyond the end of their modeling horizon in 2035. According to StanChart, a structural long-term peak is very unlikely within 10 years despite a high probability of cyclical downturns over the period. StanChart has argued that the current gulf between demand views creates significant investment uncertainty which that’s likely to force longer-term prices higher.
In other words, the energy agencies appear to agree that an oil demand peak is nowhere on the horizon.
Source: Standard Chartered Research
Traders Still Betting On The Energy Sector
The energy sector has been a standout performer in the current year, managing a 15.8% return in the year-to-date, the second highest amongst 11 U.S. market sectors. However, the sector has slipped nearly 5% over the past week with Wall Street experts warning that oil prices sit in a precarious position, which could lead to price swings as geopolitical tensions continue to escalate all throughout the Middle East.
Thankfully, traders are still betting on the energy sector.
Last week, U.S. fund assets (exchange-traded funds and conventional funds) recorded $29.7B in net outflows–in large part to money market funds–marking the third week in four that money flowed from the space. Money market funds recorded $35.3B in net outflows, equity funds lost $1B, commodities funds gave back $207M, and mixed-assets funds observed outflows of $168M.
Interestingly, two funds that recorded the most significant amount of capital inflows on the week were the Invesco S&P 500 Equal Weight ETF (NYSEARCA:RSP) at $2.8B and the Energy Select Sector SPDR Fund (NYSEARCA:XLE) at $756M.
Oil and gas stocks also remain among the least shorted. Last month, average short interest across energy stocks in the S&P 500 index increased 14 basis points to 2.56% of shares floating at the end of the month. APA Corp. (NYSE:APA) was the most-shorted energy stock, with 22.1 million shares sold short as of March 31, or just 5.98% of the shares float. EQT (NYSE:EQT) was the second most shorted energy stock at 5.85% of shares float, while Occidental Petroleum (NYSE:OXY) and Valero (NYSE:VLO) were in third and fourth place with 5.58% and 3.35%, of their floats sold short, respectively.
In comparison, medical services company IMAC Holdings Inc. is the most shorted stock in the S&P 500 with nearly 95% of its float sold short.
