Oil Demand Doesn’t Determine Price
December 5th, 2016
This brief was prompted by various estimates of oil demand that have been put forward in recent weeks and the recent run up in oil prices after last week’s OPEC supply agreement. Compared to many other estimates, we think oil demand growth would continue near current rates in coming years before starting a steady decline.
As we said in our report, The Future of Fossil Fuels, we don’t regard even the 2 percent annual decline in the extreme case of full realization of climate goals as disruptive because, in our view, oil prices are supply driven. We also continue to adhere to our view that oil prices will rise substantially in the next two years, modifying our previous oil price projections only slightly to $70/barrel oil at the end of 2017 and a $61/barrel average, holding at $100/barrel by the end of 2018.
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