Global oil supply growth is lagging demand

Sources: Bloomberg, Energy Information Administration, and Wells Fargo Investment Institute. Monthly data from January 1, 2002 to September 30, 2022. YOY = year-over-year.

Key Takeaways

  • The rate of change of demand growth versus supply growth has had a strong influence on oil prices.
  • Global oil producers were hesitant to bring extra production back in 2021. We expect demand growth to slow as economic growth slows, which could lead to some near-term consolidation in oil prices.
  • Tight supply should remain a concern over the next two years, and we suspect oil prices could spend much of that time above $90 per barrel.