The International Energy Agency increased its 2004 and 2005 estimates of world oil demand by 300,000 b/d due to growth in the Middle East and Asia.
"On the whole, 2004 demand is increased by 310,000 b/d. In most cases this adjustment is extended through to subsequent years, so the underlying growth picture remains largely unchanged," IEA officials explained.
The adjustments were not in China, where demand has been booming since 2004. "The UAE accounts for just under half of the 2004 revision, in large part due to an adjustment in bunkers' demand. Indonesia also posted unexpectedly strong growth in 2004, and demand is revised up by some 60,000 b/d," IEA reported.
Demand among countries outside the Organization for Economic Cooperation and Development (OECD) grew by "an astonishing 7.6%" in 2004 and may be subject to further adjustment before the finalized 2004 data are released in August. "China and the Middle East led the way, with 15.4% and 7.5% growth respectively," said IEA.
"Although many non-OECD economies continue to expand rapidly, aside from the Middle East, demand growth has fallen off substantially with the rise in oil prices. In 2005, non-OECD demand is estimated to have grown by only 2.7%, and in 2006 it is expected to increase by 3.1%," IEA said.
The revisions raised 2004 demand growth to 4% from an "already exceptional" 3.8%, while growth for 2005 was lifted to 1.3% from 1.2%. However, IEA predicted little impact on oil demand trends in 2006, with world consumption of crude expected to increase by 1.8% to 85.1 million b/d this year. "That this remains close to the long-term trend of oil demand growth is a testimony to the current strength of the global economy," said IEA officials. "Without high prices, oil demand would undoubtedly be much stronger."
Crude futures prices continued pushing toward $70/bbl in recent weeks on nagging geopolitical uncertainty over Iran, strong US demand for gasoline, and civil unrest in Nigeria that has sharply curbed crude exports from that country. Even stronger US demand for crude is expected as refiners complete their seasonal maintenance and rev up gasoline production for the summer driving season.
IEA reduced its forecast of global growth in demand for petroleum products to 1.47 million b/d from earlier projections of 1.49 million b/d.
Oil supplies decline
World oil supplies fell by 125,000 b/d to 84.5 million b/d in March as production outages in North America, the North Sea, and the Organization of Petroleum Exporting Countries outstripped production increases from producers outside the OECD.
Nigerian outages and reduced exports from Iran and Iraq caused OPEC crude supply to fall by 215,000 b/d to 29.7 million b/d in March. "Damage to Iraq's northern pipeline suggests exports to Ceyhan [the Turkish export terminal] are unlikely for some time," IEA officials said.
"A weaker first half trims 35,000 b/d from 2006 non-OPEC supply, but new field start-ups still boost this year's growth to 1.2 million b/d, supplemented by 275,000 b/d of OPEC NGLs," IEA said.
The first quarter of this year was particularly tight as cold weather and supply outages lifted IEA's "call on OPEC crude and stock change" by 700,000-1 million b/d above the cartel's actual production, IEA acknowledged. "While this tightness appears to ease in the second quarter, employing the adjusted call suggests underlying demand for the year is in line with current production, leaving little margin for error. Although the prospect of improved refined product supply and weaker demand growth offers some solace, the market is focusing on the present rather than the future."
OECD total industry oil stocks fell by 13 million bbl in February as draws of distillates and other products in the Atlantic Basin outpaced builds in US and Pacific crude stocks. Upward revisions to January preliminary data put total inventories at 2.6 billion bbl, 46 million bbl above last year. OECD forward demand stock cover came to 53 days, 1 day higher than last year and last month, said IEA. US crude inventories gained 3.2 million bbl to 346 million bbl during the week ended Apr. 7. Gasoline stocks dropped by 3.9 million bbl to 207.9 million bbl in the same period while distillate fuel inventories fell by 4.2 million bbl to 117.4 million bbl. US imports of crude were down by 414,000 b/d to 9.5 million b/d during the week. Total gasoline imports averaged 1.1 million b/d, marking the tenth consecutive week gasoline imports topped 1 million b/d, the largest such streak ever, EIA said.
(Online Apr. 18, 2006; author's e-mail: email@example.com)