IEA trims 2012 world oil demand growth forecast on economic woes
The International Energy Agency (IEA) on Tuesday trimmed its forecast for world oil demand growth in 2012 versus its earlier 2012 projection based on the worsening global economic backdrop and persistently elevated oil prices, but said demand will remain robust and markets tight until 2013.
The Paris-based energy watchdog also trimmed its oil demand growth forecasts for the next five years in its medium-term outlook, led by assumptions of slower economic growth in North America and Europe.
But oil demand is still set to increase by an average 1.2%, or 1.1 million barrels a year, led by countries outside the Organization of Economic Cooperation and Development.
The IEA is forecasting global oil demand of 95 million bpd in 2016, up from 88.3 million bpd in 2010.
The IEA forecast global oil demand at 90.3 million bpd in 2012, up from 89 million bpd this year.
"A large part of the downgrade is simply a lower baseline for 2011 compared to last June," said David Fyfe, head of the oil industry and markets division and editor of the report.
"Underlying global demand is about 300,000 barrels a day weaker than we were assuming in the middle of the year largely from the OECD, so yes weaker economic performance is certainly feeding into that and pulling down the demand number," he added.
However, the oil market tightness seen in the past two years could ease over the next five years as supply prospects brighten with recovery from Libya and Iraq coming in at a faster-than-expected pace along with growth from US light tight oil from shale.
US shale oil is a "major contributor" to the supply picture, adding supply growth of around 1.3 million bpd between 2010 and 2016, Fyfe said.
On a net basis, potential spare capacity in the Organization of Petroleum Exporting Countries remains tight in 2011-2012, but then eases back to between 5% and 6% of global demand, the IEA said.
The IEA forecasts demand for OPEC crude in 2012 at 30.2 million bpd, not far off the group's November output of 30.68 million bpd.
According to the IEA, OPEC's November production was up 620,000 bpd versus October mostly on increased Saudi and Libyan supplies, hitting the group's the highest level in over three years.
Oil industry stocks in the OECD declined again in October by a steep 36.3 million bbl to 57.2 days of forward cover. However, early November data show a counter-seasonal 6.9 million bbl oil stock build.
OECD oil stocks have been trending below five-year averages since July, helping to keep prompt market fundamentals tight which has partly offset concerns over economic slowdown in the euro zone, Fyfe added.
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