Oil demand globally is booming, especially here in the United States, but nobody has seemed to notice. A perfect example is this New York Times article titled "An Oil-Soaked Globe as Production Keeps Climbing and Demand Falls". Demand isn't falling; it was never falling. It's actually booming -- and higher oil prices could soon follow.

There is a lot of oil sitting in storage right now, but what the market has missed is that those storage levels have not been increasing since May.

The glut in oil happened at the end of 2014 and in the first four months of 2015. Daily oil supply and demand have come back into balance and the next step in this predictable cycle is the market heading into under-supply.

Let's focus on data and not provide unsubstantiated opinion. Let's look at the surprising positive response that oil consumers around the world have had to low oil prices, especially in the United States.   

The United States -- Demand Isn't Weak, It Has Surged

The demand reaction to low oil prices has been the most surprising in the United States. I dug into the U.S. Energy Information Administration data and found that average daily oil demand this year is much higher than it was in 2013. I wanted to compare demand in 2015 against a year where oil prices were high, so I focused on 2015 and 2013 rather than 2014. Oil prices fell significantly and demand responded quickly in the fall of 2014.

The graph below plots the EIA U.S. oil consumption data for 2015 and 2013: 

Image placeholder title

That is not a small increase in oil demand. It is an 860,000 barrel per increase on a base of 18.8 million (just under 4.5%), from a country that for the past five years had declining oil demand.  It turns out that Americans do like to drive when the gasoline is a little more reasonably priced.

The demand increase does seem to have peaked in the early months of the year, but the increase is still significant in each and every month as the chart below depicts.

Image placeholder title

The increase in American demand alone is enough to make a big difference on the global oil market. The world consumes somewhere around 95 million barrels per day.  The U.S. is a big part of this, consuming close to 20 million of those barrels. If the U.S. has experienced a consumption increase of 860,000 barrels per day this year, what might the size of the increase be on those other 75 million barrels of consumption.

The U.S. increase in percentage terms is 4.5%. If the rest of the world also has a 5% increase in consumption that would be a demand increase of 3.4 million barrels. If the global demand increase is even just half of the American demand increase we are talking about a 1.7 million jump. To put all of this in perspective, remember that in a normal year the entire world's oil demand growth has been trending around 1 million barrels per day.

Yes, inventory levels are very high and, yes, the price of oil is low. But supply and demand are not materially out of whack and the trend is for daily supply to fall below demand as production outside of OPEC is throttled by a lack of investment.

The oil market has tightened considerably in 2015 despite what the current oil price suggests. If current trends stay the same, we should start to see the price of oil creep up.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.