Hedge Fund Luminary Challenges Oil Demand Decline Narrative

Eric Nuttall, a distinguished partner and senior portfolio manager at Ninepoint Partners, has vociferously refuted the prevailing narrative of declining oil demand. In an exclusive interview with Bloomberg, Nuttall emphatically stated, “We are presently witnessing an unprecedented surge in oil consumption, surpassing all historical records.” This assertion comes in stark contrast to the pervasive argument that recessionary trends have stifled oil demand.

Nuttall further contended, “For the past year, we’ve grappled with the notion of feeble demand linked to a looming recession.” He attributed this narrative to the production constraints imposed by the OPEC+ alliance, which, in his view, has exacerbated the burgeoning disparity between oil supply and demand.

Despite global oil inventories reaching their lowest levels since 2017, the appetite for oil continues to scale new heights. Paradoxically, throughout much of this year, oil prices have languished, primarily due to prevailing fears of economic recession.

However, Nuttall anticipates a forthcoming shift in this trajectory, as constrained supply and relentless demand dynamics converge to propel oil prices to even greater heights.

It is worth noting that Nuttall’s perspective aligns with that of the International Energy Agency (IEA), which has projected record-high global oil demand for this year. The IEA’s August Oil Market Report forecasted a growth rate of 2.2 million barrels per day, culminating in a historic daily demand of 102.2 million barrels. The IEA’s outlook extends into the next year, anticipating an additional demand expansion of 1 million barrels per day.

Nonetheless, the IEA acknowledges that the rate of growth for the forthcoming year will be notably slower, attributing this deceleration to various factors, including the waning momentum of the post-pandemic rebound, lackluster economic conditions, stringent efficiency standards, and the increasing prevalence of electric vehicles.

As anticipation builds for the forthcoming release of the IEA’s Oil Market Report, oil prices, represented by Brent, surged to a notable $91 per barrel. This surge coincides with the anticipation of another inventory draw in the U.S. oil market, coupled with the release of critical consumer price data scheduled for Wednesday.

Eric Nuttall’s unwavering conviction and the IEA’s insights underscore the complex interplay of factors influencing the global oil landscape, where supply constraints and voracious demand continue to be pivotal forces.

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