Oil Demand Seems to be Moving Up – Are Higher Prices around the Corner?

The recent run-up in oil prices to $84 barrel is being blamed on an increase in Chinese oil imports. In December, Chinese imports of crude oil rose to 20 million tonnes, or the equivalent of 4.7 million barrels a day. Recent purchases of African crude have been especially high, with purchases by Asian markets reaching 1.9 barrels a day in early January, up from 1.58 barrels a day in December.

Increases in Chinese oil demand shouldn’t be too surprising, given how rapidly personal auto sales have been increasing. The Chinese purchased 13.6 million cars and light trucks last year, compared to 10.4 million for the USA–they are now the world’s #1 auto market. We should not be surprised if this demand continues to grow and exert upward pressure on prices.

The increase in Chinese purchases has been clear for some time, as has their agreement with Saudi Arabia to increase purchase levels. As a result the world is rapidly returning to the production levels that were achieved before the financial recession.

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