The oil market’s attention is shifting away from abundant supplies to much stronger global oil demand patterns that may be enough to clean up excess supplies in support of firmer underlying oil prices. Few are predicting sharply higher prices but the tone of the debate is straying away from supply to demand.

A number of important global commodity research groups have issued recent reports touting what has been very strong oil demand growth in 2017. Commerzbank, Goldman Sachs, Morgan Stanley, PVM Oil Associates, IHS, and BNP Paribas are among the notable cadre of experts shining the spotlight oil on surging oil demand.

A consensus among the investment bankers tracking oil demand that 2017’s annual pace of growth will exceed 1.6 million b/d. If true that would be the fastest annual growth pace in a decade and inch global oil usage closer to the 100 million barrels per day mark. In 2016, when folks looked ahead to 2017 they expected oil demand growth to be several hundred thousand barrels per day less than 1.6.

The International Energy Agency (IEA) weighed in this month saying “producers should find encouragement from demand, which is growing year-on-year more strongly than first thought” pointing out that second quarter global demand growth came in at a robust 1.8 million b/d.

IEA predicts oil demand growth in 2018 will be a solid 1.4 million b/d.

Oil demand has been above consensus in countries like the U.S., China, India, Brazil, Mexico, Spain, and France. Much of that extra demand has come from diesel fuel, including recent data from Australia reflecting more robust diesel usage.

What’s more notable is that the analysts forecasting sturdier oil demand growth admit if there is risk that they are wrong the risk is skewed to the upside. In other words demand growth could be stronger.

Australia and New Zealand are combined to reflect oil demand growth of 38,000 b/d in 2017 and 20,000 b/d in 2018. That is actually less than growth patterns so far in the first quarter and second quarters of 2017, based upon a close analysis from Goldman Sachs. China and India lead the growth predictions – important for Australia since these countries can soak up incremental barrels that might otherwise reach Australia.

Will the extra demand fire up oil prices later in the year?

For now the dominant few is that supply continues to be abundant from crude oil production to worldwide refinery production and that any supply taken off the market can come back on stream quickly and cheaply if motivated by higher prices.

U.S. shale oil producers freely admit that they can generate more production and cash flow with a lot of additional capital expense. One producer told Morgan Stanley that it has “been able to reduce our capital spending by 14% in 2017, and still plan to deliver 14% production growth.”

Nearly all oil price forecasts through 2017 and 2018 keep price predictions mostly in the 50s for Brent crude and West Texas benchmark grades.

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