Loading article...
Loading article...
Econ Blog
When global oil consumption runs ahead of production, prices follow. When production catches up, prices ease. Here's the chart that shows it directly.
If you've ever stared at a WTI price chart and wondered why crude spiked or collapsed in a given month, the answer is almost always in one number: the gap between global consumption and global production. The EIA publishes that monthly, in millions of barrels per day, and it tracks the WTI price more cleanly than any single geopolitical event does.
This post pairs the supply/demand gap with WTI spot prices on a single chart. The relationship is not subtle.
2016 to present, EIA STEO + FRED WTI
Red bars are months when consumption exceeded production, a supply deficit, bullish for prices. Green bars are months of production surplus, bearish for prices. The dotted line is the 4-month moving average of the gap; the navy line is WTI on the right axis. Watch how WTI inflects with (and slightly lags) the trend in the gap.
The EIA's Short-Term Energy Outlook publishes monthly estimates of global petroleum production and consumption. Subtracting one from the other gives you a single number per month: the supply balance.
The 4-month moving average filters the noise. The trend in the SMA is what WTI tracks. Single months can mislead; the rolling average rarely does.
The two lines move together most of the time, because global GDP drives both. The 2020 COVID collapse is the most dramatic divergence: consumption fell ~20 MMbbl/day in a month while production took longer to follow. The supply-balance chart above is just the gap between these two lines.
For most small businesses, oil prices feed in three places:
The supply balance is a leading indicator for all three. When the red bars start stacking up and the SMA trends positive, expect upward pressure on every petroleum-linked cost line in the next two quarters.
Headline CPI cooled meaningfully through 2024-25, but Core PCE, the Fed's preferred gauge, hovers slightly higher and the last mile to 2% is the hardest.
Retail gasoline is the inflation signal SMB owners feel first. See where it diverges from the CPI energy index, and why that gap matters for budgets.
The yield curve inverted in mid-2022 and stayed inverted through late 2024, the longest run since the 1970s. This inversion never triggered a recession.