Asia Oil Demand Stalls While Gas Surges

Global energy markets enter a pivotal phase as shifting demand patterns, tightening inventories, and long-term climate challenges reshape the outlook. Asia’s oil consumption is stalling even as natural gas surges, US stockpiles continue to draw down amid steady demand, and ExxonMobil warns that net-zero ambitions are slipping under the weight of coal’s revival and persistent oil reliance. Against this backdrop, crude prices remain under pressure technically, with momentum favoring a bearish bias until key resistance levels are reclaimed. 

Zero Oil Growth for Asia, but Natural Gas Surges 

Analysts forecast global oil product demand growth of just 0.84 mb/d in 2025 and 0.88 mb/d in 2026, with the Asia-Pacific region showing no growth at all next year. Weak consumer confidence, China’s petrochemical overcapacity, slower economic expansion, EV adoption, and fuel efficiency gains are key drags. In China, demand is set to contract further amid US trade tensions and the rapid shift to EVs and LNG-fueled trucks. 

In contrast, natural gas demand in Asia is expected to surge, with Morgan Stanley projecting 5% annual growth—the strongest worldwide—driven by transport electrification and data center expansion. 

Europe presents a mixed picture: gasoline and jet fuel consumption remain firm, even as refinery closures and stricter regulations create shortages in jet fuel and diesel. Despite weak economic growth, steady demand underscores Europe’s reliance on imports, raising energy security concerns. North America is set for stable near-term demand, though tighter standards and tariffs could weigh on gasoline and diesel consumption by 2026. 

US Oil Inventories Fall as Demand Holds Firm 

During the week ending August 22, US refineries operated at nearly 95% capacity, processing 16.9 million barrels of crude per day—about 328,000 barrels less than the prior week. Gasoline output increased, while diesel (distillate) production slipped. 

Crude imports averaged 6.2 million barrels per day, down 263,000 barrels from the week before. Commercial crude inventories fell by 2.4 million barrels to 418.3 million, leaving stockpiles about 6 percent below the five-year average. Gasoline inventories edged lower, diesel stocks fell further to 15 percent below average, and propane supplies rose to 13 percent above average. 

Overall, petroleum inventories dropped by 4.4 million barrels. Demand, however, remained firm at 21.2 million barrels per day—2.5 percent higher than the same period last year—with diesel and jet fuel use up, while gasoline demand lagged slightly. 

Exxon Sees Oil Above 100M bpd 

ExxonMobil says the world is falling further behind on climate goals, with net zero emissions by 2050 increasingly out of reach. In its latest Global Energy Outlook, the company expects global emissions to drop only 25 percent by mid-century—well short of the two-thirds cut scientists say is needed. 

The shift reflects higher coal use, slower electric vehicle sales, and consumer pushback against costly clean-energy policies. Exxon projects oil demand will peak around 2030 but stay above 100 million barrels per day through 2050, while coal will still supply 14 percent of global energy. Natural gas use is also forecast to grow more than 20 percent as electricity demand rises. 

Technical Analysis 

Crude oil retreated more than 20% from the June 23 high of $76.64 before stabilizing near $63.91, recovering a portion of recent losses. The initial reversal was signaled by a bearish Harami candlestick, highlighting fading upside momentum, and was later confirmed by a strong bearish close below the 20-period EMA, with prices briefly testing the 50-period EMA intraday. 

Momentum indicators continue to reflect downside pressure. The RSI has slipped below the neutral 50 mark, consistent with sustained selling, while the Momentum Oscillator remains under 100, pointing to persistent bearish sentiment. The bearish crossover between the 20- and 50-period EMAs further reinforces the near-term negative bias. 

Key resistance levels are noted at $64.88, $69.94, and the recent peak at $76.64. On the downside, support is observed at $61.28, $59.30, and $54.67. Until a decisive shift in momentum occurs, the outlook remains tilted to the downside. 

Conclusion 

Energy markets are navigating a complex landscape of weakening oil demand growth in Asia, firm but supply-constrained consumption in Europe, and steady draws from US inventories. At the same time, ExxonMobil’s long-range outlook underscores the persistence of fossil fuels, with coal and oil holding strong even as natural gas demand accelerates. Technically, crude remains under bearish pressure, with momentum tilted to the downside until key resistance levels are reclaimed. Overall, the balance of risks suggests heightened volatility ahead, with structural demand shifts and policy pressures continuing to shape the long-term trajectory.