Demand is the relationship between the quantities buyers are willing and able to purchase and the prices at which they would purchase them during a defined period, holding other relevant conditions constant. In physical commodity research, the word is also used more operationally for measured or estimated usage, consumption or market disappearance. Those meanings overlap, but they are not identical: demand is an economic relationship, quantity demanded is the amount associated with a particular price and set of conditions, and consumption is realized use.
Price movement versus a demand shift
A change in a commodity's own price, with other conditions unchanged, produces a movement along the demand relationship rather than a shift in demand itself. A demand shift means buyers would take a different quantity at the same price because some other determinant changed. In commodity markets that can result from economic activity, weather, technology, regulation, substitution between fuels or materials, or expectations about future conditions. Price elasticity summarizes how responsive quantity demanded is to a price change; markets with few near-term substitutes or rigid equipment constraints can show very different short-run responses from markets in which buyers can switch inputs quickly.
What reported demand can actually measure
For traders and researchers, the most important complication is that physical demand is not always observed directly. Some widely followed statistics are balance-derived proxies. In U.S. petroleum data, for example, the Energy Information Administration does not directly survey petroleum consumption; it uses “product supplied” as a proxy. Product supplied measures disappearance from the primary supply chain and is calculated from supply-and-disposition components including production, imports, inventory changes and exports. EIA notes that product supplied and consumption are not identical. This makes the measurement convention part of the meaning of the number, not a footnote.
Demand should therefore be read with its market, geography, unit, time interval and accounting convention attached. A higher price is not, by itself, evidence that demand strengthened, because a supply contraction can raise price even while quantity consumed falls. Likewise, a short-term change in an implied-demand or balance-derived series can reflect estimation, inventory or other accounting components as well as a genuine change in end-user behavior. Good analysis separates the observed quantity from the economic explanation.