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In its December monthly oil market report, the International Energy Agency said a combination of the worsening global economic backdrop and persistently heightened oil prices had resulted in the agency lowering its forecasts for global oil demand in 2011 and 2012, with projections trimmed by 160,000 b/d and 200,000 b/d respectively from the agency's November report.
IEA now sees global oil demand averaging 90.3 million b/d this year, up from last year's 89 million b/d. In 2010, demand averaged 88.3 million b/d.
Uncertain prospects for the single European currency continue to provide added downside risk to current economic growth estimates, IEA said.
All of this year's demand growth is set to occur outside OECD member countries, according to IEA, as demand is projected to contract in North America by 0.6% and in OECD Europe by 1.4%. IEA forecasts a small increase in this year's OECD Pacific oil demand to 7.89 million b/d from last year's 7.87 million b/d.
While OGJ forecasts a small increase in 2012 US oil demand following last year's contraction, IEA projects that demand in the 50 states this year will shrink by 0.5%.
Oil demand in China this year is forecast to climb to average 10 million b/d vs. last year's 9.5 million b/d. Demand will rise by 120,000 b/d in India and in Saudi Arabia this year, according to IEA.
In Africa oil demand will increase by 5.1% this year to average 3.5 million b/d, while in Latin America oil demand will grow by 3.2% from a year ago to average 6.7 million b/d, IEA forecasts.
Global oil supply
At its Dec. 14, 2011, meeting, the Organization of Petroleum Exporting Countries agreed to leave its production levels unchanged at 30 million b/d with the expectation of decelerating economic growth and a small increase in non-OPEC supply this year.
The effective output ceiling includes Libyan production, estimated to have averaged 550,000 b/d in November 2011 and off by about 1 million b/d from full production before the country's popular uprising. When full production is again achieved in Libya, other OPEC members would apparently lower output levels to accommodate the increase.
Total non-OPEC oil supply, including crude oil, processing gains, and biofuels, will climb by about 1 million b/d from 2011 to average 53.7 million b/d, according to IEA's latest projections. The 800,000 b/d increase in crude oil supply is forecast to be evenly split between advanced economies of the OECD and the non-OECD developing countries. In addition, the Paris-based agency sees 2012 increases of about 100,000 b/d each in processing gains and biofuels output.
Natural gas liquids production among OPEC members in 2012 will average 6.4 million b/d, up from last year's 5.8 million b/d average, according to IEA.
If OPEC crude output averaged 29.9 million b/d, then total 2011 oil supply was 88.4 million b/d, resulting in a draw in inventories of about 600,000 b/d based on IEA demand estimates.
Assuming IEA's 2012 demand forecast and OPEC crude output of 30 million b/d for the year and the resulting total oil supply of 90.1 million b/d, then inventories would be drawn down by 200,000 b/d this year.
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