(John Kemp is a Reuters market analyst. The views expressed are his own)
LONDON – World oil demand grew by just 843,000 barrels per day (bpd) last year, the slowest pace for 14 years, outside U.S. recessions.
Consumption increased by less than 1 percent to 92.1 million bpd in 2014, according to the BP Statistical Review of World Energy published on Wednesday.
Demand in the advanced economies of North America, Europe and Asia has been declining for nine years and is now down by 5 million bpd since 2005.
Over the same period, however, consumption in non-OECD economies has risen by almost 12.7 million bpd, according to BP.
For the last decade, the non-OECD has absorbed all the growth in supply. In 2013 and 2014 emerging economies consumed more oil than the advanced economies for the first time.
But last year the continued slide in OECD consumption (-475,000 bpd) was offset by relatively tepid growth in the non-OECD (+1.3 million bpd).
Three years with oil prices consistently above $100 per barrel have prompted widespread measures to conserve fuel and switch to cheaper alternatives such as natural gas.
The marked slowdown in global consumption occurred at precisely the same time oil supplies were soaring thanks to the shale revolution.
The result was an inevitable correction in prices to bring the market back into balance by lifting demand and slowing supply, a point which was made by the then chief executive of Saudi Aramco at the World Economic Forum in January .
There is no need to invoke conspiracy theories about “geopolitics” to understand the halving of oil prices over the last 12 months.
But the price mechanism is already working to resolve the imbalance.
Shale production is leveling off after five years of rapid growth and worldwide oil consumption is much stronger.
Most major oil producers, traders and market analysts expect consumption to grow by 1.5 million bpd or more in 2015, about twice as fast as in 2014.
(Editing by William Hardy)
This article was from Reuters and was legally licensed through the NewsCred publisher network.