Thursday, Part II; Energy Demand To Surge This Year, Next -- June 11, 2015

Several interesting stories on global oil demand, connecting a couple of dots that I predicted months ago: when Saudi starts giving their oil away at $50 / bbl, global demand will increase.

This is the lead story over at Yahoo!Finance right now, Reuters is reporting an exclusive: Saudi Arabia ready to raise oil output further to meet demand.

Wow -- to meet demand. For its cheap, cheap oil. Who wudda thought.

Saudi Arabia increased production in May to around 10.3 million barrels per day (bpd) - its highest rate on record - as a result of increased global demand.

Any increase in production in a market which already faces a glut would signal that OPEC is unrelenting in its decision to maintain global market share.

The strategy is seen as a major factor in the sharp decline in oil prices over the past year.

"We have plenty of crude... You are not going to see any cuts from Saudi Arabia," Al-Subaey said after meeting Indian oil officials in New Delhi.

Look at the number: 10.3.

We'll come back to that later if I remember.  

But this was the earlier story: Reuters is reporting that oil demand will surge this year. Wow -- due to cheap, cheap oil being given away by Saudi Arabia. Who wudda thought?

World oil demand will rise much more than expected this year, the International Energy Agency (IEA) said on Thursday, in the latest sign that the collapse in oil prices is helping to boost fuel use.

Look at the new projection, this is not trivial:

The agency, in a monthly report, raised its forecast for global oil demand growth in 2015 by 280,000 barrels per day (bpd) to 1.40 million bpd, bringing demand this year to almost 94 million bpd.

"Recent oil market strength of course partly stems from unexpectedly strong global oil demand growth," said the Paris-based IEA, which advises industrialised nations on energy policy. 

From 280,000 bopd to 1.4 million bopd. Huge. 

Financial Times data here:

• Saudi Arabia utput in May reached 10.33m barrels a day
• the kingdom’s oil output had been 10.31m b/d in April
• The "10.33 million" is said to be a record, but the previous record was not reported (I'm not counting the 10.31 million in April)

However, from The Wall Street Journal:

The Kingdom’s previous record peak was 10.2 million barrels a day in August 2013. It told the Organization of the Petroleum Exporting Countries that it produced 9.64 million barrels a day in February.

Mr. Naimi said that the kingdom’s production will continue at around 10 million barrels a day, signaling that his country is determined to ride out the price slide without making any output cut. 

Now, recall that Saudi Arabia announced, in 2012, a $35 billion, 5-year plan, to sustain production.

I think T. Boone Pickens pegged Saudi correctly.