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Oil consumption tracking is all about Asia

22 2 0

Oil market analysts must make sense of a bewildering array of statistics about production, consumption and inventories, compiled and published with varying definitions and degrees of accuracy and timeliness.

The challenge is to form an accurate and nuanced picture of the whole market capable of generating useful forecasts, without becoming lost in the insignificant details.

The World Bank identifies around 200 economies in the world, but on the consumption side, at least, only a handful are individually important for market analysis.

The oil market is best thought of as a complex adaptive system.

Complex systems are “large networks of components with no central control and simple rules of operation that give rise to complex collective behaviour”.

From the demand side of the oil market, however, the only countries worth tracking individually are those with consumption large enough to affect the market as a whole and changing fast enough to alter equilibrium.

Just ten countries account for well over half of global oil consumption and three-quarters of the incremental growth over the last decade, and these are the ones it is crucial to follow closely.

Other countries are too small to have an individual impact, though they can make a difference in groups when consumption changes collectively in response to common global influences such as price spikes and recession.


© Middle East Monitor