OECD Consumption Drops For First Time in Decades

Here’s one that few saw coming: According the International Energy Agency as reported by the Wall St. Journal (subscription), developed country consumption of oil dropped .6% in 2006. According to the Journal:

“Though the decline appears small, it marks the first annual drop in more than 20 years among the OECD countries, which drain close to 60% of the 84.4 million barrels of oil used globally each day…

Yesterday, U.S. benchmark oil for February delivery settled at $50.48 a barrel, down $1.76, or 3.4%, on the New York Mercantile Exchange. Earlier in the day, futures fell below $50 a barrel for the first time since May 2005, hitting a fresh 20-month low after the Energy Department said U.S. crude-oil stockpiles rose the most in more than four years. Oil has been sliding since peaking above $77 in July. This year, prices have fallen 17%…

To be sure, global oil demand grew 0.9% in 2006, owing to steady growth in China and the Middle East. But that was down from growth of 3.9% in 2004 and 1.5% in 2005. And the price fluctuations highlight the role played by expectations, rather than simple supply and demand, in determining the price of oil on world markets.”

So, it seems the bubble has finally burst.