Crude oil use in emerging markets outpaces U.S.
By Tom Stundza -- Purchasing, 4/21/2008 4:31:00 PM
Crude oil prices continue to head higher because of increasing fuel consumption in emerging markets, regardless of an expected U.S. downturn. “Supply isn't growing and demand is growing robustly in the developing world,” Jeffrey Rubin, chief economist at CIBC World Markets Inc. in Toronto, tells Bloomberg. And that could lead to $150/barrel crude this summer, suggest other economists. Today, crude costs $1.16 on the spot market in New York.
China, India, Russia and the Middle East will consume more crude oil than the U.S., burning 20.67 million barrels a day this year, an increase of 4.4%, according to the International Energy Agency in Paris. U.S. demand will contract 2% to 20.38 million barrels daily, the IEA says.
Economic growth of more than 8% in China and India, coupled with increasing car ownership among the countries' combined populations of 2.45 billion people, will more than compensate for falling U.S. demand. Oil use worldwide will increase 2% this year because of growth in emerging markets, the Paris-based IEA says.
Meanwhile, Mike Wittner, head of oil research at Societe Générale in London tells Bloomberg Television that “it is debatable” whether the U.S. oil demand matters to world prices anymore. “As far as the oil market is concerned, demand growth is going to be continued to be driven by China and the Middle East,” he says.
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