Back when the automobile was first getting started, people bought gasoline at local pharmacies. Drug stores kept a few cans on hand and sold them to the handful of motorists that actually existed. Will there come a time when, once more, the gasoline engine is treated like a hobbyist toy? Maybe, according to a report from the International Energy Agency, which was spotted once again predicting a peak demand for fossil fuels in general.
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That’s sending several oil funds, including the ProShares Ultra Bloomberg Crude Oil Fund (NYSEARCA:UCO), the United States Oil Fund (NYSEARCA:USO), and the Invesco DB Oil Fund (NYSEARCA:DBO) into positive territory in Tuesday morning’s trading session. This is an odd direction to go, but it does make some sense. The IEA noted that demand for oil, coal, and natural gas would likely reach its maximum height before 2030 arrives. Essentially, the growth of electric vehicle adoption, and an increased push toward renewable power options, will stunt the growing demand for these products.
This makes some sense; after all, the IEA was forecasting peak demand somewhere around 2026 as recently as June 2023. There, it predicted that transport oil use would start declining in 2026, with peak demand hitting in 2028. That might be a bit optimistic, as it depends on so much going right. And it also acknowledges that fossil fuels will still be a requirement in at least some places. Still, the rate of decline will likely be unsettling to casual observers; demand is poised to go from 2.4 million barrels per day this year to 400,000 barrels per day in 2028.
A look at today’s trading for USO, UCO, and DBO shows a similar upward trend. In fact, all three saw a near-vertical spike in today’s trading, albeit to different extents.
