Friday, June 13, 2008

Peak Of Oil Demand

Media has been plagued with articles on peaking of oil supply. Let's have a look at what some others say about the peaking of oil demand. But whats most important is with the fresh developments with CFTC, comments at the bottom.

Overall, crude oil consumption growth so far in 2008 softened to a paltry 0.4%, in line with non-OPEC supply gains and well below overall total world production growth. OECD led the decline, with non-OECD demand growth to slacken further

Even with oil hitting record highs, China's oil imports during May reached their second highest levels on record

The increase in fuel prices in India, Pakistan, Indonesia, Malaysia will slow oil consumption growth only marginally since these countries account for only roughly 5% of global demand for oil. China may follow suit after the Olympics

Market tends to conflate legitimate reasons for demand growth with what is likely a temporary spurt in recent demand for inventory related to Olympics

Fuel subsidies breed soaring rates of domestic fuel consumption, particularly in OPEC countries, where gasoline is 25 cents/gal in Venezuela and 50-60cents/gal in Saudi Arabia, Kuwait and Iran. No sign of plans to remove subsidies soon in any of these countries

China's car ownership, at only 4% of the population, is expected to rise to 10% by 2015. The fuel-efficient Prius costs nearly twice as much in China as in the US

At constant nominal GDP growth rates, oil burden would have to be US$190-200/barrel to drive oil burden index towards 1980 peak

Commonwealth Bank:
Though global growth may slow down in 2008-09, economic development in emerging markets should contribute to oil demand in the long run to 2025

As per my call to short the bugget at US$139, one of the major catalyst I was looking forward to was regulatory changes to curb the seemingly unlimited position limits of many speculators. These are referred in the market place as the "London loophole". The Commodity Futures Trading Commission (CFTC) held talks yesterday with its UK counterpart about the possibility of introducing limits on traders' positions in London's oil markets. The belief is that traders are exploiting London's openess.

CFTC announced that it has created an interagency task force, which will include the Federal Reserve, to study the role of speculators and index traders in London and their trading activities.
CFTC requires US exchanges to put in place limits on the size of positions taken by traders to reduce potential threat of market manipulation. The FSA has no such rule. It is hoped that a similar futures contract mirroring WTI traded on ICE Futures Europe would voluntarily impose position limits. Currently ICE does not. The wheels have begun to turn.

p/s photo: Andrea Fonseka


solomon said...

Curbing the trading limits might not help, traders still can mushroom from somewhere, so long the trade is still profitable.

Make the transaction more expensive (such as consider increasing the trade deposit), this will more effectively in short term.

Next, is the education on fuel consumption. Public needs to keep on be reminded of the extinction of resources and we should efficiently use them.

The real information on the world oil demand and production should also made available. However, I think this is not possible because of strategic reasons.

My guess before the big players get hold their parachute, the oil price is not peaking yet like Gazprom official predicted last few days.

random said...

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Thank you

peaceminded said...

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Fart him off at

peaceminded said...

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Salvatore_Dali said...


the net is free, it allows idiots to set up websites... too many idiots, not enuff time

Salvatore_Dali said...


thats what he wants, he wants attention... just ignore it, be the bigger person, some ppl r born demented, we can only shake our heads

random said...

Samuel L. Jackson quoting the Bible in Pulp Fiction

Jules: The path of the righteous man is beset on all sides by the iniquities of the selfish and the tyranny of evil men. Blessed is he, who in the name of charity and good will, shepherds the weak through the valley of darkness, for he is truly his brother's keeper and the finder of lost children. And I will strike down upon thee with great vengeance and furious anger those who would attempt to poison and destroy my brothers. And you will know my name is the Lord when I lay my vengeance upon thee.

Dragonkid said...

Despite more and more US Senators' outcry to curb excessive speculation (ala futures swaps) through immediately putting a lid to the contract limits at ICE & NYMEX, the oil futures (Lsco & bco) are not reacting very much. GomenSucks & MoganSley have people like RobRubin who are well connected in the world financial circuit to know the ways out of this real threats from the law makers.

Despite the testimonies from the Insiders, there seems to be a clear legal authority for CFTC to act on FIs. US Senators should investigate why the speculators are given special previleges( given status as commercial rather than speculator) of limitless trading size.

This is a world of financial manipulation to the greatest degree. Why US government is not treating this unprecendented manipulation of commodities & energies futures as an economic urgency? The whole world is suffering from the Inflation phenomenon! If this inflation is unchecked & spiralled as per the whims & fancies of GS, MG & ChaseM, the Great Recession of the Twenties would seem petite.

Salvatore_Dali said...


exactly my sentiments... actually tomolo's article in The Star will be on the same subject matter... is the senate, bernanke camp stronger than the paulson, rubin camp?

CaptainCaveman said...

Hi Sal Dali,

This Andrea Fonseka pic got more of my attention than the article hehe. Where did you get this much much slimmer picture of hers?! Can share more?


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