IEA Ups its Oil Demand Forecast as Statoil Hints at No Long Term Future For Crude

Oil demand in the near term could be compromised by developing trade wars. File Image / Pixabay

More crystal ball prognostications about the future of the crude market were supplied on Thursday by the International Energy Agency, which in its latest monthly report upwardly revised its global oil demand forecast to 99.3 million barrels per day (bpd) for 2018 - with the caveat of U.S.-instigated trade wars possibly spoiling economic growth and, consequently, the very demand the agency thinks is robust.

As for the long term view, in a dramatic display of symbolism hinting that it doesn't see crude demand enduring in the foreseeable future, energy giant Statoil's board of directors has proposed changing the company's name to Equinor: "The name Equinor captures our heritage and values, and what we aim to be in the future," explained Eldar Saetre, Statoil's president and CEO, in a statement.

The IEA report outlined several factors in crude favour, including a market re-balancing that is "clearly moving ahead" with supply and demand becoming more closely aligned; however, it focused on Venezuela as being a huge risk factor and said, "Without any compensatory change from other producers it is possible that the Latin American country could be the final element that tips the market decisively into deficit."

The agency also worried that recent signs of protectionism fostered by U.S. president Donald Trump in the form of trade wars with several countries (most notably China) could hamper economic growth: "A slowdown (in global trade) would have strong consequences, particularly for fuel used in the maritime sector and in the trucking industry."

While all these elements are certain to cause consternation within crude trading circles, those at Statoil supposedly envision an energy market in which oil plays a notably diminished role: Saetre said of the company's name change (which will be proposed to shareholders at its annual general meeting on May 15), "As we position ourselves for long-term value creation and to be competitive also in a low carbon future, we have been searching for a name that captures our heritage and values, and at the same time reflects the opportunities we see.

"I am confident that the name Equinor will support our strategy and vision to shape the future of energy."

CNBC pointed out that Statoil is the latest firm to subtly disassociate itself from crude: Danish energy powerhouse Orsted was previously known as Dong Energy, Dong referring to Danish Oil and Natural Gas.

The news agency noted, "With the business moving towards green energy – it said it would be coal free by the year 2023 – and divesting its upstream oil and gas business, it said that its old name was 'no longer suitable for the company.'"

Earlier this week, Helima Croft, global head of commodity strategy for RBC Capital Markets, called Venezuela's rapidly collapsing economy "a clear and present danger" and predicted the impact to the market would begin to be felt in May of this year.