The wisdom of doing nothing

The International Energy Agency’s estimates of global oil demand growth – watch the evolution:

  • May (2016): 1.2 mmbpd y-o-y in 2016.
  • June: 1.3 mmbpd in 2016, 1.3 mmbpd in 2017.
  • July: 1.4 mmbpd in 2016, 1.3 mmbpd in 2017.
  • August: 1.4 mmbpd in 2016, 1.2 mmbpd in 2017.
  • September: 1.3 mmbpd in 2016, 1.2 mmbpd in 2017.
  • October: 1.2 mmbpd in 2016, 1.2 mmbpd in 2017.

Back to square one. Too much optimism based on 2q data, cooled off by 3q sluggishness.

A boring note on the IEA’s latest. The October revision of the 2016 demand growth forecast from 1.3 to 1.2 mmbpd does not square up with the higher demand estimates for 3q and 4q 2016 in the front-page chart. The chart actually indicates that 2016 y-o-y growth should be 1.4 mmbpd unless 2015 demand was retroactively revised.

I believe it was. (Since the IEA’s monthly report will only become available to the general, non-paying public in two weeks, I can only rely on media reports citing bits and pieces from the document.) It’s clear that the IEA has raised both the 2016 and the 2017 demand estimates by 0.2 mmbpd, which obviously leaves 2017 y-o-y growth unchanged at 1.2 mmbpd (97.5 on 96.3 mmbpd). However, in order for 2016 y-o-y growth to go down by 0.1 bpd from the previous estimate, the IEA’s number for 2015 demand should have gone up by 0.2-0.3 mmbpd (allowing for rounding errors). I’ve seen a Reuters article citing the IEA’s claim that 2015 demand growth as all-time high at 1.79 mmbpd. That would put demand at exactly 95 mmbpd in 2015, assuming no changes to the 2014 number. Now, I suspect the 2014 estimate also got padded by 0.1 mmbpd, resulting in 93.2 mmbpd for 2014 and 95.1 mmbpd for 2015. These retroactive changes didn’t make their way to the main chart.

Last time, the IEA messed up the order of paragraphs in the report summary for the public. Today, it’s the chart on the front page that doesn’t fit with some numbers in the summary. Waiting for the full text of the report to clear things up.

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